PERSPECTIVE: HOW THE MEDICARE PROGRAM BENEFITS FROM THE INFLATION REDUCTION ACT

The pricing of prescription drugs has come under scrutiny recently by consumers who believe manufacturers set an extremely high price for highly sought-after prescription drugs for consumer use. More than 5 million Medicare beneficiaries struggle to afford prescription drugs [1]. Medicare is a federally funded program initially designed to provide health insurance coverage for citizens 65 and over and retirees. With no prior federal regulation in place to deter price gouging of prescription drugs, §1191 of the Inflation Reduction Act establishes a pathway for negotiating prescription drugs in the Medicare program as well as extending premium subsidies for policies obtained through the Affordable Care Act. Under this provision, Secretary shall establish a Drug Price Negotiation Program that:

(1) Publishes a list of selected drugs under §1192;

(2) Enter into agreements with manufacturers of selected drugs concerning such period, per §1193;

(3) Negotiate and, if applicable, renegotiate maximum fair prices for such selected drugs, per §1194;

(4) Carry out the publication and administrative duties and compliance monitoring per §1195 and §1196[2].

The Inflation Reduction Act also includes a maximum monthly cap on cost-sharing and no deductible for covered insulin products. The applicable copayment amount would be either $35, an amount equal to 25 percent of the maximum fair price established, or an amount equal to 25 percent of the negotiated price of the covered insulin product under the prescription drug plan [3]. The implementation of these provisions will sustain lowering drug costs in the Medicare program by offering an alternative to paying increasing drug prices thus improving access to care.

[1] Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health & Human, Services. Secretary of Health and Human Services’ Report on Prescription Drug Affordability among Medicare Beneficiaries. 2022. Prescription Drug Affordability among Medicare Beneficiaries ().

[2] Pub.L. 117-169.

[3] Pub.L. 117-169.