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Tag: Inflation Reduction Act

  • Will Medicare continue negotiating drug prices?

    Will Medicare continue negotiating drug prices?

    Among other things, the Biden Administration’s Inflation Reduction Act authorized the Centers for Medicare and Medicaid Services (CMS) to negotiate the prices of a number of costly prescription drugs. Back in August, CMS announced prices for the first ten drugs subject to price negotiation and, more recently, it announced the next 15. Jonathan Cohn reports for Huffington Post on the forces at work to undermine Medicare drug price negotiation.

    Medicare drug price negotiation not only lowers federal spending on prescription drugs to the tune of billions of dollars, it should also save people with Medicare money, both in premiums for Medicare Part D and in copays. But, few people with Medicare appear to be aware of these cost-saving reforms, according to a recent Kaiser Family Foundation poll. They are not yet benefiting from lower drug prices.

    People won’t see savings from the 10 drugs in the first round of Medicare drug price negotiations until 2026. And, they won’t see savings for the next 15 drugs with negotiated drug prices until 2027. Those drugs are: Ozempic; Rybelsus; Wegovy; Trelegy Ellipta; Xtandi; Pomalyst; Ibrance; Ofev; Linzess; Calquence; Austedo; Austedo XR; Breo Ellipta; Tradjenta; Xifaxan; Vraylar; Janumet; Janumet XR; and, Otezla.

    To date, prices for some diabetes and cancer drugs, as well as drugs that treat blood clots, have been negotiated. In addition, as of January 1 of this year, Medicare Part D includes an out-of-pocket cap of $2,000, which was also part of the Inflation Reduction Act.

    It’s not clear yet whether Republicans in Congress will succeed at repealing these cost-savings provisions in the Inflation Reduction Act. Many of them appear to want to do so, even though it would drive up prescription drug costs for older adults and people with disabilities, as well as increase Medicare spending.

    Project 2025, the Heritage Foundation plan for the Trump Administration calls for repealing these provisions. And Senator Mike Crapo of Idaho, the new chair of the Senate Finance Committee, is fully on board. Pharmaceutical companies will continue to innovate in a world with drug price negotiations. They must. But, hundreds of thousands more Americans will die needlessly without negotiated drug prices, as they won’t fill their prescriptions. Drugs don’t work if people can’t afford them.

    Here’s more from Just Care:

  • Prices for top Medicare drugs are up a lot

    Prices for top Medicare drugs are up a lot

    The prices for brand-name drugs have been rising much faster than the rate of inflation for tens of years, reports Leigh Purvis for AARP. Older and disabled Americans with Medicare feel these price increases, especially when they take as many as four or five prescription medicines every month and generally must pay a percentage of the cost of their drugs out of pocket.

    In the first two days of this year, NPR reports that drugmakers hiked up the price of 575 drugs by around three to four percent. That price hike is lower than in past years when drug price increases could easily be 10 percent, but higher than the rate of inflation. Because of the Inflation Reduction Act (IRA), drugmakers will face government penalties for these hikes, but they likely expect to offset the cost of those penalties with greater profits from people in the commercial market.

    About 20 percent of people with Medicare say that they manage the cost of their drugs by not filling prescriptions or not taking full doses. The AARP Public Policy Institute analyzed what’s happening with the 25 brand-name drugs that Medicare Part D spends the most on and that are not subject to Medicare drug price negotiation. Medicare spent about $50 billion on these drugs in 2022. Seven million people used these drugs.

    The Public Policy Institute found that the list prices for these 25 drugs nearly doubled since they first came to market, well above the rate of inflation. More than 40 percent of the brand-name drugs’ list prices today stem from price increases since they came onto the market.

    Purvis concludes that the IRA goes a long way to stop these huge price increases. Not only does it allow Medicare drug price negotiation, but it forces pharmaceutical companies to pay stiff penalties if they raise the price of their drugs above the rate of inflation. The IRA helps to ensure that people with Medicare can afford to fill their prescriptions and to promote good health outcomes.

    As of this year, because of the IRA, you should pay no more than $2,000 out-of-pocket for drugs covered through your Medicare Part D drug plan.

    Here’s more from Just Care:

  • Medicare Part D drug costs: What to expect in 2025

    Medicare Part D drug costs: What to expect in 2025

    If you have Medicare, you will likely see many changes to your Medicare Part D drug costs in 2025. The Inflation Reduction Act of 2022 should lower your drug costs. Here’s what the Kaiser Family Foundation says to expect.

    Your Medicare Part D premiums probably will increase in 2025. That’s because your total annual out-of-pocket drug costs will be capped at $2,000, far lower than this year. To avoid higher costs and lower profits, Medicare Part D insurers will spread the cost of this cap across everyone who enrolls.

    The Inflation Reduction Act anticipated a Part D premium increase. It includes a provision that does not allow the Part D “base premium” to rise more than six percent from the prior year. What does that mean exactly? Unfortunately, it’s not as simple as a limit on your individual premium increase.

    A new voluntary demonstration, through the Centers for Medicare and Medicaid Services, might also help some people in Traditional Medicare who buy stand-alone drug coverage avoid big premium increases. It lowers the base premium by $15 a month and limits the premium increase from 2024 to 2025 to $35 a month.

    The base premium for Part D will be $36.78 in 2025. That does help reflect what the Part D premiums will be. We will know that in September.

    Here’s what we know now: The standard Part D benefit is changing in significant ways. Enrollees getting the standard benefit will meet their deductible and then pay 25 percent of the cost of their drugs until they reach the $2,000 maximum out-of-pocket cap.

    N.B. This year, if you are willing to give up Traditional Medicare, with access to the physicians and hospitals of your choice anywhere in the US, and subject yourself to huge administrative hurdles when you need complex and costly care, in a Medicare Advantage plan, your Part D premiums are, on average, significantly lower than the Part D premiums for stand-alone plans available to people in Traditional Medicare, $9 v. $43 a month.

    Here’s more from Just Care:
  • Medicare Part D plans can make it hard to get prescription drugs

    Medicare Part D plans can make it hard to get prescription drugs

    As you might already know, Medicare Part D plans can make it hard to get the prescription drugs you need. That’s not to say you shouldn’t have Part D coverage because it could protect you from out-of-control prescription drug bills. But, you still might spend less paying for your drugs out of pocket with a discount coupon from GoodRx or through Costco mail order or from a verified pharmacy abroad.

    First, the good news. Beginning next year, your out-of-pocket costs for drugs that Medicare Part D covers will be capped at $2,000 a year. The Inflation Reduction Act, one of President Biden’s big accomplishments is responsible for that limit as well as negotiated drug prices for some of the highest cost drugs in Medicare.

    But, corporate health insurers offering Part D like to make money, so they are finding ways to shift more costs on to their enrollees.Part D insurers are making it hard for their enrollees to fill certain prescriptions. Either these insurers are not covering certain medicines altogether or they are forcing people to go through multiple hoops before they will pay for certain drugs, according to a recent Health Affairs study.

    For the most part, if a Part D plan does not cover a drug, then that drug is not subject to the $2,000 out-of-pocket cap.

    How do Medicare Part D insurers limit their prescription drug spending and/or boost their revenue?

    1. They don’t include certain drugs on their formulary; they now don’t cover 30 percent of drugs, up from 21 percent 13 years ago. Apparently, they are now not covering come drugs that treat cancers and autoimmune disorders.
    2. They promote brand-name drugs for which they get large rebates from pharmaceutical manufacturers and make copays for generic substitutes more expensive or simply don’t cover generics.
    3. They restrict access to drugs through prior authorization requirements. In 2020, they restricted access to 44 percent of them.
    4. They require the use of generics and won’t cover brand-name alternatives.

    Why does the government permit these restrictions?

    Here’s more from Just Care:

  • People with Medicare spend twice as much on healthcare as other people

    People with Medicare spend twice as much on healthcare as other people

    People with Medicare spend twice as much on healthcare as other people, according to a new Kaiser Family Foundation report. On average, people with Medicare spend $7,000 a year or 13.6 percent of their total household spending a year. People under 65 spend about 6.5 percent of their income or $4,900 a year.

    Higher spending for Medicare population is not surprising. People with Medicare on average have lower incomes than younger working people. Annual average household income for working people is $74,100 as compared with $51,800 for people with Medicare. And, of course, people with Medicare use significantly more health care services than younger working people.

    These healthcare expenses for people with Medicare represent a bigger portion of their income than health care expenses for younger working people. What’s noteworthy is that as a share of total household spending, people with Medicare’s health care expenses are about the same in 2022 as they were in 2013.

    The Inflation Reduction Act could lower people with Medicare’s out-of-pocket healthcare costs somewhat. It caps prescription drug costs under Medicare Part D at $2,000 a year for covered drugs, beginning in 2025. And, it brings down the costs of some high-cost drugs beginning in 2026. It will also be easier for people to qualify for extra help paying their prescription drug costs as Congress has expanded access to these subsidies.

    People with Medicare still need to buy supplemental coverage to fill gaps in traditional Medicare unless they have Medicaid or subsidized employer retiree coverage. If they are in a Medicare Advantage plan, they can pay as much as $8,700 a year in out-of-pocket costs for in-network care alone, though on average Medicare Advantage plans cap their costs at around $5,000 a year for in-network services (about twice the cost of Medicare supplemental coverage.)

    Here’s more from Just Care:

  • Dozens of drug companies owe Medicare rebates from raising prices higher than the inflation rate

    Dozens of drug companies owe Medicare rebates from raising prices higher than the inflation rate

    The Biden Administration just announced that dozens of drug companies owe Medicare rebates from raising prices higher than the rate of inflation. As a result , hundreds of thousands of people with Medicare will save as much as $2,786 per dose of their prescription drugs.

    The Inflation Reduction Act (IRA) prevents drug price gouging–defined as price increases greater than the rate of inflation–by pharmaceutical companies. The IRA also caps out-of-pocket costs for each insulin drug at $35 a month and limits total out-of-pocket drug costs for people with Medicare through Medicare Part D to $2,000 a year beginning in 2025. Yet, Republicans are trying to repeal the IRA.

    In total, the Administration reports that pharmaceutical companies raised prices on 64 drugs more than inflation. For example, the price of Signifor, which treats an endocrine disorder, went up so much that people who use it could see a savings of $311 for a monthly dose of the drug beginning in January.

    President Biden is also heralding his Administration’s decision to allow the government to “March-in” and help bring down the price of drugs developed with federal funding, if the price is unreasonable. This march-in right has always existed but prior administrations have been reluctant to take the position that the government could step in if a pharmaceutical company charged an excessive for the drug.  Of course, the proof of this Administration’s commitment here is in determining that the price of a drug developed with federal money is too high and taking action. Time will tell.

    Meanwhile a story in Becker’s exposes extreme drug price increases for eight drugs, according to ICER.  The story suggests that insurers spent more than $1.3 billion in these drugs in one year. It’s not clear if that means that individuals paid higher premiums to cover the cost of the drugs, but presumably so. The question left unanswered is whether the insurers recouped that money they spent for these drug, through rebates, and left their enrollees’ holding the bag, a likely scenario.

    Herre’s more from Just Care:

  • Drug prices: Biden v. Trump

    Drug prices: Biden v. Trump

    Heather Landi reports for Fierce Healthcare on how Donald Trump’s former Secretary of Health and Human Services, Alex Azar, and Joe Biden’s current Secretary of Health and Human Services (HHS), Xavier Becerra, would address high drug prices. Not surprisingly, their views differ significantly.

    Azar does not recognize that pharmaceutical companies in the US engage in price fixing. Or, that the pharmaceutical companies often delay the release of new drugs in order to maximize profits on older drugs, hampering innovation. Or, that it’s much easier for people in France to fill their prescriptions than people in the United States because out-of-pocket costs in the US are so high.

    Azar does recognize the power of pharmacy benefit managers, PBMs, to drive up people’s out-of-pocket costs, but does not suggest a plan to fix that issue,. For example, he does not propose removing PBMs from the process of deciding which drugs are covered and at what price to patients.

    Last year, Congress passed the Inflation Reduction Act or IRA, giving Medicare drug price negotiating power for 10 drugs in 2025; the Centers for Medicare and Medicaid Services have chosent the 10 drugs, based on which cost the Medicare program the most. The IRA also capped out-of-pocket costs for each insulin product people with diabetes use at $35 a month. And, it imposed an out-of-pocket limit of $2,000 for drugs covered by Medicare Part D plans beginning in 2025.

    President Joe Biden’s HHS Secretary Becerra touts Medicare’s drug price negotiation power as an effective way to lower drug costs, pointing out that the IRA now caps the cost of insulin at $35 per month for seniors who have Medicare.

    Of note, the Trump administration had proposed that Part B drug prices–for inpatient drugs–be tied to prices paid abroad for these drugs. That sounds to me as if it would have been a smart move. But, the Biden administration rescinded that proposal, likely under pressure from the pharmaceutical industry.

    Here’s more from Just Care:

  • Medicare names 10 drugs subject to price negotiation

    Medicare names 10 drugs subject to price negotiation

    It’s beyond even my imagination that Medicare’s ability to negotiate just 10 drug prices as a result of the Inflation Reduction Act is a big deal. There are more than 19,000 prescription drugs, and the IRA still leaves people with Medicare paying far more than people in other wealthy countries for these drugs–if they can afford to. But, in this crazy country, the pharmaceutical industry is so powerful, the Biden administration and its allies are celebrating this accomplishment and concerned that Pharma’s legal challenges could upend it.

    The Inflation Reduction Act gave Medicare the right to negotiate the prices of 10 brand-name drugs that have been on the market for some time and do not have generic competition, beginning in 2026. The goal is to save both Medicare and Medicare patients money. Unlike every other country, the US effectively confers monopoly pricing power to pharmaceutical corporations for their patented prescription drugs and, consequently, we pay higher prices for medications than every other wealthy country.

    Over the next four years, Medicare will have the right to negotiate prices for up to 60 prescription drugs, if the pharmaceutical industry does not prevail in its lawsuits to prevent the government from negotiating drug prices. After that, Medicare will be able to negotiate the price of up to 20 drugs each year. President Biden hopes that older adults will support his and other Democrats’ candidacies in 2024, as a result of, and to ensure the lasting benefits of, this achievement.

    In particular, millions of people with Medicare should see significant savings on several drugs that treat diabetes. In addition, beginning this year, diabetics with Medicare pay no more than $35 a month for each insulin drug they use. And, important vaccines, like RSV, are free. But, if voters don’t re-elect Democrats, it’s more than likely that a Republican Congress and President will try to undo these savings they refused to support.

    The $99 billion in projected savings from drug price negotiation over 10 years is going towards an annual out-of-pocket limit of $2,000 for prescription drugs under Medicare Part D.

    How will the drug price negotiations work? Pharmaceutical companies will need to agree to negotiate the prices for their drugs on the government’s list of 10. If they agree, the pharmaceutical companies must share data with the government to be used in negotiating the price. If they do not agree to drug price negotiation, they will pay a large penalty tax that can be as high as 95 percent of their sales of that drug, or they could withdraw the drug from the Medicare and Medicaid markets.

    In February 2024, the government will propose a price for each drug. The pharmaceutical companies can propose an alternative.  Negotiations will ensue. The government will announce final prices in September 2024, but the negotiated prices will not take effect until January 2026.

    In February 2025, the government will announce the next 15 drugs to have their prices negotiated.

    The drugs subject to price negotiation fall into two buckets, explains Dylan Scott for Vox:

    1)  Seven expensive drugs for diabetes, heart disease and other chronic conditions that millions of people use:

    • Eliquis, for blood clots ($561 list price for one month’s worth of treatment that cost Medicare around $16.5 billion over the year ending May 2023)
    • Entresto, for heart failure ($545 list price)
    • Farxiga, for diabetes, heart disease, and chronic kidney disease ($549 list price)
    • Januvia, for diabetes ($586 list price)
    • Jardiance, for diabetes and heart failure ($570 list price)
    • Xarelto, for  blood clots and heart disease ($542 list price)
    • Insulin injectors and the products used to refill them: Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen and NovoLog PenFill

    2) Three extremely expensive drugs that tens of thousands of people with severe and sometimes life-threatening conditions use and that cost Medicare about $2.6 billion each over the year ending May 2022:

    • Enbrel, for rheumatoid arthritis, psoriasis, and psoriatic arthritis ($1,762 list price for one week’s dosage)
    • Imbruvica, for blood cancers ($13,546 list price for one month’s worth of tablets)
    • Stelara, for psoriasis, psoriatic arthritis, Crohn’s disease, and inflammatory bowel disease ($25,497 list price for eight weeks of use) 

    Here’s more from Just Care:

  • Biden administration penalizes drug companies hiking drug prices above the rate of inflation

    Biden administration penalizes drug companies hiking drug prices above the rate of inflation

    The Inflation Reduction Act (IRA), which became law in August 2022, appears to be working to rein in the ever-escalating price of some prescription drugs. Jonathan Cohn writes for the Huffington Post about 43 prescription drugs with price increases greater than the rate of inflation. The Biden administration has signaled them out for Medicare savings, imposing penalties on the drug companies that manufacture them.

    Humira, a very popular drug that treats inflammatory conditions, and Leukine, a drug that protects people on chemotherapy from infections, are two drugs with big price hikes that the Biden administration has identified. As a result of the IRA, our federal government will impose monetary penalties on drug companies manufacturing  the 43 drugs with excessive price increases. And, people with Medicare who take any of these drugs will pay lower coinsurance for them, saving $1 to $449 per prescription.

    None of the drugs on this initial list are prescription drugs covered under Medicare Part D. Rather they are all administered by a doctor and are covered under Medicare Part B, under which people pay 20 percent coinsurance if they do not have supplemental coverage to pick up that cost. People with supplemental coverage should also benefit from the IRA because the government penalties should help keep their supplemental insurance premiums down.

    Over time, the list will grow to the extent pharmaceutical companies raise prices at rates greater than the rate of inflation. And, the list will include drugs covered under Medicare Part D.

    The IRA also caps insulin costs for people with Medicare to $35 a month. And, beginning in 2025, the IRA caps out-of-pocket spending under Medicare Part D at $2,000 a year.

    All these advances to curb prescription drug costs for the Medicare program and the older adults and people with disabilities who count on Medicare are meaningful. These reforms will make it much easier for many people to get their drugs. But, the IRA still leaves people with Medicare paying far more than people in other wealthy countries for their drugs. And, even with the IRA, pharmaceutical companies can gouge Americans when it comes to drug prices.

    Here’s more from Just Care:

  • Merck sues Medicare over negotiated drug prices

    Merck sues Medicare over negotiated drug prices

    Merck just filed a lawsuit challenging the legality of the Inflation Reduction Act‘s provision allowing Medicare to negotiate some drug prices with pharmaceutical companies. The administration is holding firm to doing so, notwithstanding. The law is intended to lower drug prices in Medicare.

    Merck claims that if negotiated drug prices take effect, it will keep drug manufacturers from innovating new drugs. It wants a court to say that it does not have to take part in drug price negotiations with the federal government. If the issue is innovation, the question becomes how much profit do the pharmaceutical companies need to generate to ensure they innovate and innovate for drugs that we need. Last year, Merck profited $14.5 billion.

    In response to the lawsuit, Secretary of Health and Human Services Xavier Becerra said, “We’ll vigorously defend the President’s drug price negotiation law, which is already lowering health care costs for seniors and people with disabilities. The law is on our side.”

    The IRA drug price negotiation provision is not set to take effect for another two and a half years. And, in its first year, only 10 drugs that have been on the market for several years without competition will have lower negotiated prices.

    Merck is claiming the drug price negotiation law is unconstitutional because it is taking of property for the public without fair compensation. In this country at this time, Merck could win. But, the law is not on Merck’s side.

    The IRA drug price negotiation provision is designed to withstand constitutional challenges. It allows Merck to turn down Medicare’s final negotiated price. Merck would then be subject to a tax. But, the tax could end up being hundreds of millions of dollars a day over time, according to Merck’s complaint.

    We still don’t know which drugs are included among the 10 the government intends to negotiate prices for in 2026. But, one of Merck’s drugs, Januvia, which some diabetes patients use, could be among them. And, in future years, another Merck drug, Keytruda, which some cancer patients use, could be another.

    Public Citizen President Robert Weissman issued the following statement:

    “Merck is claiming the U.S. constitution requires the U.S. government and people to be suckers. That’s not true.”

    “There’s no Sucker Clause in the 1st Amendment, 5th Amendment, or anywhere else in the Constitution.”

    “This lawsuit is a desperate attempt by the industry to beat back popular legislation that would curtail Big Pharma’s ability to price gouge Medicare and secure monopoly profits. Full stop.”

    “While Big Pharma’s litigation gambit plays out, it is critical that the federal government continue its preparation for price negotiations. Delay in the commencement of long overdue negotiations will result in billions of dollars in excess costs for taxpayers and consumers.”

    Touche!

    Here’s more from Just Care: