Here are the Details of the New Law That Will Lower Drug Prices

Here are the Details of the New Law That Will Lower Drug Prices

As published on the website, an analysis by Kaiser Health News says this about the new legislation:

The new legislation “… will have a major impact on Medicare, including by allowing the program to negotiate prices for some of the most expensive drugs, capping beneficiaries’ out-of-pocket payments for drugs, limiting their insulin cost sharing to $35 a month, and barring drug companies from raising prices faster than inflation.

“The drug pricing provision, estimated to save the government $100 billion over 10 years, would require the U.S. Department of Health and Human Services to identify Medicare’s 100 most expensive drugs and then pick 10 for price negotiations starting in 2023. Those prices would take effect in 2026. Another 10 drugs would be added over the next two years, with the savings fully in effect by 2028.

“The negotiations would apply first to drugs people get at the pharmacy, but in the later two years, drugs that people get in doctors’ offices could also be covered.

“Some of the Medicare changes would kick in next year. One is the cap on price hikes. Under the bill, companies that raise the price of drugs sold to Medicare faster than inflation must pay rebates back to Medicare, generating an estimated $101 billion in savings for the government. The inflation protections will also apply to certain drugs, such as biologicals, that patients get in a doctor’s office.

“New vaccine and insulin cost caps would also take effect in 2023. Under the bill, all vaccines recommended by the federal Advisory Committee on Immunization Practices will be fully covered by Medicare, as well as by Medicaid and the Children’s Health Insurance Program. For Medicare beneficiaries who need insulin, out-of-pocket costs would be capped at $35, and starting in 2026, the cap would be $35 or 25% of the negotiated price if that is lower.

“Another big saver for Americans enrolled in Medicare would be a $2,000 cap on out-of-pocket drug costs, which would begin in 2025. According to an analysis by the Council for Informed Drug Spending Analysis based on data from 2012, about 3.5 million beneficiaries would likely save more than $1,500 a year.

“Starting sooner, in 2024, people whose out-of-pocket drug costs reach the “catastrophic” threshold of $7,050 will not have to pay any additional money on drugs that year. Currently, there is no cap, and people must pay 5% of the cost of extremely expensive drugs after hitting the threshold.

“Also starting in 2024, Medicare would extend low-income subsidies to about 500,000 beneficiaries who earn between 135% and 150% of the poverty level ($18,347 to $20,385 for a single person). Premium hikes on drug plans would also be limited in 2024 to 6% for all beneficiaries through 2029.

“The bill could have reached far more people, but Democrats’ attempts to slow the increase in drug prices and cap insulin copays outside of Medicare were blocked.”