Here’s when drug prices will start to decrease for Medicare recipients
Starting next month, a
The bill also requires pharmaceutical companies to pay Medicare rebates for drugs where prices surpass inflation for Medicare Part D and mandates that the government negotiate drug prices on some prescription drugs for people who have Medicare – the first time Medicare has been given that power. While it's unclear how many people will ultimately benefit from the various changes, 49 million people are enrolled in Medicare Part D plans, according to the
The Medicare Part D rebates began in October. That same month, Medicare also began paying more for some biosimilar drugs to create more competition, lower the cost, and improve access to those drugs for consumers. Biosimilars are drugs that are very similar to an existing drug, and have an average sales price that isn't higher than the other drug.
The insulin cap that goes into effect next month benefits Medicare Part D recipients, who also no longer have to meet a deductible on their insulin. A
"The whole history of health reform in this country is that you really want to try to frontload real benefits to real people. And insulin, because of the relative technical simplicity, is a great place for that right away. You give sick people who really need the help, and where there's been a lot of crazy cost-sharing for patients, earlier, so the benefits of the legislation start to become apparent pretty quickly," he said.
Medicare patients spent
But the Health and
In September,
"The bill is designed to have Medicare negotiate for the drugs that have the highest aggregate spending, so it really does give you the most bang for the buck," said
The price changes should start to have a real impact on Americans in 2026. "They'll get roughly a 30 percent haircut on that deductible portion of their drug in a lot of cases. Most people would notice that," Frank said.
According to an analysis of the impact of the Inflation Reduction Act from the
How will pharma respond?
A
"That's just one of those side effects from this legislation that we can't really control in this country because we don't have any sort of organized approach to setting the price of drugs the way that other countries do," Cubanski said. "The Inflation Reduction Act provisions are expected to be helpful at constraining the growth in drug prices for existing drugs, but doesn't have any provisions in it to limit the level at which drug prices are set for new drugs coming to market."
The government can only negotiate for drugs that have been on the market for a certain number of years – nine years for small molecule drugs, typically pills, including some cancer treatments, and 13 for biologics, which use living cells and are difficult and more expensive to manufacture.
"I think there is an effort by pharmaceutical companies to bring innovative products to the market because there is, I think, a recognition among the pharmaceutical industry that that is where they have kind of the upper hand in prices and price negotiations – when we're talking about drugs that are truly unique and innovative and don't have competitor products," Cubanski said.
She added that the possibilities of how drug companies could respond are largely unknowable at this point, however, because there is still so much to be done on the policy level.
They could also try to take their financial burden to the private insurance market or use citizen petitions to try to halt generic drugs from being approved by the FDA, at least for a while, NBC News reported.
Gee said she sees those messages about cost-shifting or raising launch prices as a scare tactic from pharmaceutical companies and said there isn't really anything holding them back from raising prices now.
"But there's very little discipline for them now because the market is so concentrated," she said. "If they could raise their price another
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