Q: I keep seeing information that recent legislation will lower the cost of my prescription drugs, but I haven’t seen much of any change yet, other than the $35 cap on insulin costs which is helping a friend of mine. What else should we be watching for over the next year?
A: The Inflation Reduction Act of 2022 made changes to Medicare that are expected to expand benefits, lower drug costs, and improve the financing in coming years. For the first time, Medicare has the authority to negotiate the prices of certain high cost “single source” drugs that have no generic or biosimilar equivalents.
As you noted, insulin costs for Medicare Part D recipients are capped at $35 per monthly prescription, which became effective in January 2023. According to early comments that we’ve received, that change is resulting in some significant savings. We note this change has also led to patients discovering the need to switch insulin prescriptions, when appropriate, to ensure their insulin is covered by their drug plan.
Starting last month, some Medicare beneficiaries now pay less out of pocket for 27 prescription drugs that have prices that increased faster than inflation. The drugs include the anti-inflammatory drug Humira, and the CAR-T cancer treatment Yescarta. The Centers for Medicare and Medicaid Services (CMS) estimates that Medicare recipients with Part B coverage who take one of the drugs affected by inflation rebates could save between $2 and $390 per average dose depending on their circumstances, thus it appears to us the savings could be relatively modest at first.
This new inflation rebate applies to certain Medicare Part B drugs which are administered through a doctor’s office or outpatient clinic. According to the fact sheet released by CMS, those who use these prescriptions may pay a reduced amount for their co-insurance than paid before the new law. TSCL is closely watching the roll-out since many Part B patients are covered by Medicare Advantage plans or have a Medigap plan that covers much of these costs on their behalf. Thus, we’re concerned that despite the hype about savings, patients may not immediately see much in the way of savings right away. We believe it’s quite possible that insurers may see more of the savings on these drugs than beneficiaries — at least in 2023.
Finally, as of this year, all Medicare-covered vaccines should be free to you. Medicare beneficiaries do not owe any co-pays, coinsurance, or deductibles, such as your drug plan deductible if your doctor recommends a Medicare-covered vaccine.
More savings on prescription drug prices are in the pipeline, including a $2,000 cap on Part D out-of-pocket spending that is due to go into effect in 2025. To learn more, here is a slideshow about the prescription drug provisions in the Inflation Reduction Act prepared by the nonpartisan Kaiser Family Foundation.
Sources: “Reduced Coinsurance For Certain Part B Rebatable Drugs Under The Medicare Prescription Drug Inflation Rebate Program,” Center For Medicare and Medicaid Services, March 2023.