House Passes Historic Legislation to Lower Drug Prices
Last Friday the House of Representatives completed the last Congressional action needed to pass the historic legislation that will, finally, lower some prescription drug prices.
The bill has been sent to the President for his signature, after which it will become law.
The provision to lower drug prices, which is part of a much larger bill called the Inflation Reduction Act, passed the House in a 220-207 party-line vote. As in the Senate, every Democrat voted in favor of the bill and nearly every Republican voted against it. (Four Republicans did not vote.)
It took more than a year of negotiations among Senate Democrats on a spending package to finally pass the bill and just a few weeks ago it appeared to be dead in the water. The legislation will increase taxes on corporations, address climate change and bring down the prices of prescription drugs, all while lowering the deficit.
In brief, the health care provision of the bill will allow Medicare to negotiate lower prices for 10 high-cost drugs starting in 2026. By 2029, that number is expected to grow to 20 drugs. Additionally, the measure allows caps to be placed on some drug costs, but mainly for Medicare. In addition, for the first time, a tax penalty will be imposed on drug companies failing to abide by new prices.
We give a more detailed description of what the bill will do below for those who are interested.
Supporters of the bill claim that enabling Medicare to negotiate prices will lower the cost of prescription drugs for the nearly 64 million Americans who are currently on Medicare and more specifically for the 1.4 million beneficiaries who spend more than $2,000 per year on their medications.
Opponents of the bill continue to say that it will result in fewer new medications being invented and in a shortage of certain medications for seniors.
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Second Republican Senator Proposes Taking Away the Guarantee of Social Security, Medicare
As most voters are aware, there will be elections this fall. All seats in the House of Representatives are up for election as are one-third of the seats in the Senate.
As things appear now, the Republicans are expected to become the majority party in the House and could also become the majority party in the Senate, although in recent days that has become more in doubt.
That is why it is troubling that twice this year Republican Senators have proposed taking away the guarantees of Social Security and Medicare to seniors.
Here is what that means.
Funding for Social Security, Medicare, and Medicaid are what is known in Congress as “mandatory spending,” meaning the funding for those programs happens automatically every year. Those are the biggest programs with mandatory funding, but others like unemployment compensation, retirement programs for federal employees, student loans, and deposit insurance are also mandatory.
The other type of funding is called “discretionary.” Most of the other large federal government spending programs are in this category, such as defense, education, agriculture, etc. This means that the budgets and funding for those programs must be voted on every year. Although Congress has managed to finally pass budgets every year, it is also true that every year since 1998, Congress has failed to pass a budget on time, and it is often not until the next year that they finally manage to do so.
You may recall times in the recent past when the government shut down for a period because Congress cannot agree on the budgets.
Last spring Senator Rick Scott (R-Fla.) proposed that all mandatory spending programs, including Social Security, Medicare, and Medicaid become discretionary so that every year Congress would have to debate and fight over how much money to spend on them.
Then very recently another Republican Senator, Ron Johnson of Wisconsin, said the same thing.
According to Johnson, “If you qualify for the entitlement, you just get it no matter what the cost,” Johnson said. “And our problem in this country is that more than 70 percent of our federal budget, of our federal spending, is all mandatory spending. It is on automatic pilot. It never — you just do not do proper oversight. You do not get in there and fix the programs going bankrupt. It is just on automatic pilot.”
We would hope that those multi-millionaire Senators do not mean that if Congress decides there is not enough money, they would not fully fund Social Security, Medicare, and Medicaid, but under his proposal that is what could happen.
At the very least, under this scheme, if Congress could not approve a new budget until the following year, it is highly unlikely that seniors would get their COLA at the first of each year as they do now.
TSCL thinks this is a horrible idea and we would fight with every resource at our disposal to defeat it.
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Here are the Details of the New Law That Will Lower Drug Prices
As published on the website Modernhealthcare.com, 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.”
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As we continue moving toward a new normal in dealing with the Covid 19 pandemic, TSCL remains constant in our fight for you to protect your Social Security, Medicare, and Medicaid benefits.
For progress updates or for more information about these and other bills that would strengthen Social Security and Medicare programs, visit our website at www.SeniorsLeague.org or follow TSCL Facebook or on Twitter.