Guest Editorial: Biden has drug-price boomerang - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Advisor News
    • Annuity Index
    • Annuity News
    • Companies
    • Earnings
    • Fiduciary
    • From the Field: Expert Insights
    • Health/Employee Benefits
    • Insurance & Financial Fraud
    • INN Magazine
    • Insiders Only
    • Life Insurance News
    • Newswires
    • Property and Casualty
    • Regulation News
    • Sponsored Articles
    • Washington Wire
    • Videos
    • ———
    • About
    • Meet our Editorial Staff
    • Advertise
    • Contact
    • Newsletters
  • Exclusives
  • NewsWires
  • Magazine
  • Newsletters
Sign in or register to be an INNsider.
  • AdvisorNews
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Exclusives
  • INN Magazine
  • Insurtech
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Video
  • Washington Wire
  • Life Insurance
  • Annuities
  • Advisor
  • Health/Benefits
  • Property & Casualty
  • Insurtech
  • About
  • Advertise
  • Contact
  • Editorial Staff

Get Social

  • Facebook
  • X
  • LinkedIn
Newswires
Newswires RSS Get our newsletter
Order Prints
December 26, 2023 Newswires
Share
Share
Post
Email

Guest Editorial: Biden has drug-price boomerang

Sun (Yuma, AZ)

From the Wall Street Journal:

President Biden keeps trying to persuade Americans his policies are helping them, but voters aren't buying it. The latest example is the Inflation Reduction Act's (IRA) Medicare drug rebates, which are raising the cost of medicines.

The White House on Dec. 14 proclaimed that the IRA's drug rebates are already saving seniors money: "President Biden's prescription drug law cracks down on price gouging from Big Pharma."

Under the IRA, drug makers must pay Medicare rebates if they raise list prices more than the rate of inflation. If a company increases the price of an immunotherapy by, say, 8% while inflation is increasing at 3%, it must pay Medicare the 5% difference. Co-insurance payments made by patients are then based on the inflation-adjusted price.

Rebates are deposited in the Medicare Supplementary Medical Insurance Fund, which is mainly financed by general tax revenue. In other words, politicians, not seniors, are the real beneficiary of the rebates.

According to the Administration, IRA drug rebates save seniors "as much as $618 per average dose on 47 prescription drugs" (our emphasis). This is deceptive marketing. It's possible that Medicare co-insurance as a result of the IRA could be hundreds of dollars less on a cancer drug that costs tens of thousands of dollars per dose and whose list price increases by double digits. But most Medicare patients will see little benefit.

On the other hand, privately insured patients will likely pay much more for drugs owing to the rebates. Democrats tacitly conceded this when they drafted the law. They initially planned to apply the IRA inflation rebates to the private insurance market too. That's because employers worried that drug makers would offset the cost of the Medicare rebates by raising prices for their workers.

This is what has happened in Medicare with hospital and physician fees. Because Medicare typically pays less than the cost of care, providers charge privately insured patients more to compensate. Private health plans paid hospitals 224% of Medicare rates in 2020, according to a Rand Corp. study. Between 2013 and 2018, prices paid to providers increased at double the rate for commercial insurers as for Medicare fee for service.

Medicaid's mandatory rebates – 23.1% for brand drugs and 13% for generics off the average manufacturer price – save Medicaid tens of billions of dollars a year. But drug makers have raised prices that privately insured and Medicare patients pay to offset those Medicaid rebates, especially for drugs used mostly by low-income patients. Medicaid rebates have also reduced the already slim margins for making generic drugs, contributing to the current shortages.

Senate budget rules blocked Democrats from extending inflation rebates to private markets. So drug makers will invariably raise prices for privately insured patients and launch new drugs at higher prices. This may already be happening. Prescription drug prices have increased at a faster rate since the IRA passed, even as overall inflation has moderated.

Prescription drug prices increased by 2% during the Trump Presidency owing to greater generic competition, yet they've increased 5.5% so far under Mr. Biden. In November they rose at an annual rate of nearly 6%. Has the White House considered that the reason Americans don't believe that the President's policies have helped them is because they haven't?

This editorial originally appeared in the Wall Street Journal, and is reprinted here via the Associated Press. Read more online at https://www.wsj.com/

Older

Letters: Insurance companies aren't the only businesses state should worry will leave

Newer

BCBSIL, Springfield Clinic end impasse

Advisor News

  • What to do when adult children become the client
  • Judge rules insurers not liable for Newport Group’s AME Church pension lawsuit
  • Why vacation homes are becoming a major blind spot for advisors
  • The rise of the ‘gray divorce’ insurance client
  • Succession planning: Building the future of your practice
More Advisor News

Annuity News

  • Best’s Market Segment Report: Global Life/Annuity Reinsurers Remained Poised for Steady Growth
  • When technology becomes easy to rent, what still separates life and annuity carriers?
  • Legacy Marketing Group® and Malibu Life USA Announce Distribution Partnership for New Fixed Indexed Annuity Platform
  • Empower Annuity Insurance Company of America Trademark Application for “EMPOWER WHAT’S NEXT” Filed: Empower Annuity Insurance Company of America
  • Industry pushes back on linking ‘financial strength’ to annuity illustrations
More Annuity News

Health/Employee Benefits News

  • The cost of ignoring long-term care
  • Reports on Geriatrics and Gerontology from National Hospital of the Faroe Islands Provide New Insights (10-year Cognitive Change In the Faroese Septuagenarian Cohort and Impact of Sociodemographic, Lifestyle, and Health Factors): Aging Research – Geriatrics and Gerontology
  • Department of Anesthesiology Researchers Have Provided New Data on Opioid Crisis (Insurance Noncoverage of Interventional Pain Procedures: Paving the Road Toward the Second Prescription Opioid Crisis): Opioids – Opioid Crisis
  • 160,000 Pennsylvanians Off Health Insurance Exchange After Price Hikes
  • New Medicaid rules could hit 600,000 Oregonians. Many may not know it
Sponsor
More Health/Employee Benefits News

Life Insurance News

  • AM Best Withdraws Credit Ratings of New Providence Life Insurance Company
  • When technology becomes easy to rent, what still separates life and annuity carriers?
  • St. Paul & Minnesota Foundation invests $15M to help revive downtown St. Paul
  • Legacy Marketing Group® and Malibu Life USA Announce Distribution Partnership for New Fixed Indexed Annuity Platform
  • NAIC SUMMER NATIONAL MEETING HIGHLIGHTS COLLABORATION AND ADVANCES PRIORITIES
More Life Insurance News

NEWS INSIDE

  • Companies
  • Earnings
  • Economic News
  • INN Magazine
  • Insurtech News
  • Newswires Feed
  • Regulation News
  • Washington Wire
  • Videos

FEATURED OFFERS

Press Releases

  • Classic Car Insurer OpenRoad Insurance Expands to 40 U.S. States in Two Years
  • How Aspire General Turned an Early Technology Bet Into Claims Automation at Scale with Kyber
  • Adjusto launches AI-Native contents claims services powered by its technology platform
  • URL Insurance Group Celebrates 40 Years of Service, Growth, and Industry Leadership
  • MassMutual Ascend Surpasses $2 Billion in Lifetime Advisory Annuity Sales, Reflecting Continued Momentum in RIA Channel
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Advisor News
  • Annuity Index
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • From the Field: Expert Insights
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Magazine
  • Insiders Only
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Washington Wire
  • Videos
  • ———
  • About
  • Meet our Editorial Staff
  • Advertise
  • Contact
  • Newsletters

Top Sections

  • AdvisorNews
  • Annuity News
  • Health/Employee Benefits News
  • InsuranceNewsNet Magazine
  • Life Insurance News
  • Property and Casualty News
  • Washington Wire

Our Company

  • About
  • Advertise
  • Contact
  • Meet our Editorial Staff
  • Magazine Subscription
  • Write for INN

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2026 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • InsuranceNewsNet Magazine

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.
Insurance News | InsuranceNewsNet