JustCare

Tag: IRA

  • President Trump threatens Pharma with tariffs

    President Trump threatens Pharma with tariffs

    President Trump has spent his first few weeks in office undoing much of what President Biden had put in place, but he is not (yet) prepared to undo the Medicare drug price negotiation provisions in the Inflation Reduction Act. In fact, in a meeting with pharmaceutical company executives, he threatened to impose tariffs on pharmaceutical companies if they did not relocate their manufacturing to the US, reports Tristan Manalac for Biospace.

    “Pharmaceuticals, it’ll be 25 percent and higher, and it’ll go very substantially higher over [the] course of a year,” said President Trump. These tariffs would drive up drug prices substantially for working Americans. The Inflation Reduction Act (IRA), passed under the Biden Administration, penalizes drug companies for raising Medicare and Medicaid drug prices more than the rate of inflation.

    President Trump has still not said what he will do about Medicare drug price negotiation. Among other things, the IRA calls for the Centers for Medicare and Medicaid Services (CMS), which oversees Medicare, to negotiate the price of 15 prescription drugs that drive high Medicare spending in 2025.  In 2024, CMS negotiated the price of 10 high-cost prescription drugs. Those new drug prices are set to take effect in 2026.

    Pfizer, Lilly, Merk CEOs all attended the meeting with President Trump. Their trade association, PhRMA, has been trying to undo the provisions in the Inflation Reduction Act that reduce drug company profits. The drug companies have sued the government, so far unsuccessfully, claiming that lower drug prices are effectively a taking of their property. Of course, the only reason they can charge the prices they do in the US is because our government has given them monopoly pricing power on patented drugs, unlike the governments in every other wealthy nation.

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  • 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.

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  • Some Democrats oppose Biden’s goal of lowering more Medicare drug prices

    Some Democrats oppose Biden’s goal of lowering more Medicare drug prices

    The Lever reports on a cadre of Democratic Congressmen committed to opposing Biden’s goal of lowering more drug prices for people with Medicare. Not surprisingly, these policymakers happen to be the beneficiaries of lots of pharmaceutical industry money. What’s going on?

    The Inflation Reduction Act includes provisions to allow Medicare to pay negotiated drug prices for ten drugs in 2026. It allows Medicare to negotiate drug prices for an additional 150 drugs through 2034. President Biden wants to expand that number to 500 drugs, which would reduce Medicare spending on high-cost drugs and should also reduce people’s copays for those drugs.

    Former President Trump, if reelected, appears interested in weakening Medicare drug-price negotiation. At one point during his presidency he said he supported drug price negotiation, but he has since backed down from that position.

    Democrats Scott Petters of California, Josh Gottheimer of New Jersey, and Wiley Nickel of North Carolina are prepared to go against their president and fight some Medicare drug price negotiation as well. The pharmaceutical industry and other medical industry groups have contributed $300,000 to them in the last year. Gottheimer is considering a run for governor of New Jersey.

    These Democrats are sponsoring legislation that claims to be defending research on orphan drugs, aping the drug industries’ common refrain that negotiated drug prices will compromise investment in research. It is interesting how negotiated drug prices around the world don’t appear to concern them or the fact that Americans are forced to pay three or four times as much as people in other wealthy countries for the same drugs.

    Experts say that pharmaceutical companies will still rake in big profits on orphan drugs with negotiated prices, just not quite as big as they do now. Moreover, the Inflation Reduction Act exempts “orphan drugs” from Medicare price negotiations if they are treating only one rare disease. If Peters, Gottheimer and Nickel get their way, orphan drugs would be excluded from Medicare price negotiations even if they treat multiple rare conditions.

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  • 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.

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  • President Biden drafts a package of health care reforms for his second term

    President Biden drafts a package of health care reforms for his second term

    President Joe Biden is assembling a package of health care reform proposals for his second term, including a proposal to bring down the price of prescription drugs, reports CNN. It’s a smart move given that health care affordability is the second most important issue for Americans, after inflation.

    At the same time as President Biden looks to enhance people’s health care benefits, former President Donald Trump is calling to repeal the Affordable Care Act (ACA). President Biden wants to keep federal subsidies for people receiving care through the ACA and do more to reduce drug prices for people with Medicare and all other Americans. Biden’s goals are modest given the state of health care in the US and we need to push him to call for affordable health care for all, but his goals are far better than Trump’s.

    The ACA not only gives 10 million more Americans health insurance through the state health insurance exchanges, it expanded Medicaid to cover more Americans. People with incomes up to 135 percent of the federal poverty level are Medicaid-eligible. President Biden is looking into ways to ensure that the three and a half million people in the 10 states that opted against expanding Medicaid have Medicaid coverage.

    President Biden is again calling for a public health insurance option. In theory, such an option could remove the private insurer middlemen and all the waste and increased costs they bring. But, it’s not at all clear, based on Medicare Advantage and traditional Medicare (the public option) that a public health insurance option would bring down costs. The devil is in the design.

    Right now, the Centers for Medicare and Medicaid Services (CMS), which oversees Medicare, is focused on bringing down the price of ten drugs that cost the Medicare program the most, as required by the Inflation Reduction Act. That’s both the camel’s nose under the tent for lower drug prices and small potatoes. The swiftest and easiest way to bring down drug prices is to allow people to import drugs from abroad and require insurers to cover those far less costly drugs.

    The Inflation Reduction Act also penalizes drug companies for raising drug prices more than the rate of inflation. This measure should keep drug prices from going up at obscene rates. But, it is also small potatoes, given how high drug prices are in the US–often four times higher than in France.

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  • 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.

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  • 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.

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  • 2023 federal spending bill promotes health and financial security of older adults

    2023 federal spending bill promotes health and financial security of older adults

    Dena Bunis writes for the AARP Bulletin on how the 2023 federal spending bill promotes the health and financial security of older adults, strengthening Medicare, Social Security and retirement savings.

    Expanded Medicare coverage: 

    • Telehealth coverage: The federal spending bill continues Medicare coverage of telehealth services for two years, through December 2024.  People in traditional Medicare and Medicare Advantage are covered for video and telephone visits while at home.
    • Hospital at home: In some cases, Medicare will cover care from hospitals in people’s homes, rather than at the hospital.
    • Behavioral and mental health: Starting in 2024, Medicare will cover a wider range of behavioral and mental health care providers, including intensive outpatient mental health services.

    More Social Security funding: 

    The Social Security Administration gets $785 million more for its operations.

    Social Security pays for itself. But, Congress has year after year failed to appropriate enough money from its Trust Fund to cover its administrative costs. As a result, customer service is underfunded. People must wait an average of 35 minutes to reach the Social Security Administration by phone. And, claims for disability benefits take significantly longer to be processed than ten years ago.

    This federal spending bill appropriates $14,1 billion for Social Security, which is 5.9 percent more than last year, though less than the $14.8 billion that the administration requested.

    Easier retirement savings:

    Secure 2.0 provisions in the federal spending bill make it easier for workers to get retirement plans and for older adults to have retirement accounts.

    • The spending bill raises the age at which people must take minimum distributions from IRAs and 401(k)s from 72 to 73.
    • The spending bill includes a new tax benefit for low and middle-income adults, effective 2027, that can lower their tax bills if they  contribute to qualified retirement plans. They can get a federal matching contribution of as much as $1,000.
    • The spending bill includes a new national database for to help people find retirement accounts from previous jobs.
    • In some cases, the spending bill increases contributions to 401(k) and 403(b) accounts beginning in 2025, for people 60 t0 63.
    • Reduces the time part-time workers must wait to join a retirement plan from three years to two years beginning in 2025.

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  • Will Rx provisions in the IRA disappoint?

    Will Rx provisions in the IRA disappoint?

    Michael Hiltzik writes for the Los Angeles Times about the prescription drug provisions in the Inflation Reduction Act (“IRA”). He makes the case that they could disappoint Americans. Pharmaceutical companies will fight hard to ensure that the drug price negotiation requirements do not achieve their desired outcomes.

    On one hand, as Stat News declared, the drug price negotiation provisions in the IRA are a “crowning healthcare achievement.” And, that’s true. But, frankly, it’s unsettling that these provisions could be a crowning achievement, given that all other wealthy democracies have far more comprehensive negotiation provisions for their entire population in place.

    Medicare spends more on prescription drugs than any other purchaser in the US, and Medicare’s costs are only rising. Medicare is responsible for about one in three dollars spent on prescription drugs and about one in five dollars spent on health care. The IRA is not going to bring down those numbers in a meaningful way.

    Hiltzik focuses on the fact that drug price negotiation won’t begin for three and a half years and, then, only for 10 drugs. Moreover, only drugs that have been on the market for at least nine years are eligible for price negotiation. All in, the Congressional Budget Office calculates a 1.3 percent reduction in Medicare spending as a result of the drug price negotiation provision.

    Hiltzik imagines that the pharmaceutical companies will find ways around even this narrow piece of legislation. I agree. I imagine drug companies will sue if their drugs are chosen to be the ones whose prices are negotiated. And, even if they don’t, prices will still likely be well above what other wealthy countries spend on these same drugs, since the IRA does not give Medicare the tools to drive a hard bargain.

    Unlike the Veterans’ Administration, Medicare is not allowed to cut drugs from its list of covered drugs. So, it cannot use the leverage of walking from the table if the negotiated price the drug company agrees to is too high. Part D drug plans can already negotiate drug prices and walk, in some cases, if they’d like. But, insurers offering Part D plans are looking only to maximize their revenues, which is a far cry from wanting to bring down the price of drugs.

    Pharmaceutical companies surely will also raise launch prices to more than make up for any cuts in their drug prices. Hiltzik alludes to one new treatment for a rare drug disease with a launch price of a whopping $2.8 million.

    This all said, Medicare drug price negotiation provides a much needed opening, a big foot in the door, for lower drug prices in the US. And, that’s a big deal.

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  • Beginning at age 72, you must withdraw money from your retirement accounts

    Beginning at age 72, you must withdraw money from your retirement accounts

    If you have money in an individual retirement account, once you turn 72, the Internal Revenue Service requires that you withdraw money from this account every year, even if you still work. (Note: The Secure Act of 2019 made changes to this rule. “If you reached the age of 70½ in 2019 the prior rule applies, and you must take your first Required Minimum Distribution by April 1, 2020. If you reach age 70 ½ in 2020 or later you must take your first Required Minimum Distribution by April 1 of the year after you reach 72.”)

    In effect, once you turn 72, the IRS requires you to stop saving all your money in your individual retirement account “IRA” or most other employer-based retirement accounts, such as 401(k), 403(b) and 457(b) plans. You must withdraw it over time. Unfortunately, when you withdraw the money, the government gets to tax it. Remember that any money that you put into these accounts went in tax-free, before taxes. And, any money in an IRA can appreciate without any taxes on the appreciation until you withdraw the money.

    • How much must you withdraw from your retirement account? The amount you are required to withdraw before the end of each year depends upon the amount in your IRA and your life expectancy. It is called the RMD or required minimum distribution. The total distribution can come out of one or more of your IRA accounts, if you have more than one. It does not have to come out of each one of them. But, the 401(k) and 457(b) distributions must come out of those accounts.
    • Can you withdraw more than the required minimum distribution amount? Yes. You will be taxed on whatever amount you withdraw that was deposited pre-tax; it will be counted as part of your taxable income and taxed at your income tax rate. It will not count towards your RMD for the following year.
    • Are there any retirement accounts not subject to the RMD? Any retirement accounts you have with after-tax contributions are not subject to the RMD and you are not required to withdraw money from them. This would include a Roth IRA, unless you inherited it.
    • When must you take your first distribution? You are permitted to take your first distribution in the April of the calendar year following the year you turn 72.  Put differently, you do not need to take a distribution in the calendar year you turn 72. But, you must then take another distribution by the end of that calendar year.
    • What if you forget to take a distribution? If for any reason you forget to take a distribution when you are required to, do so as soon as possible and complete an IRS form explaining why you forgot. Unless the IRS accepts your explanation, you may have to pay a big penalty if you do not take a distribution when you are required to. That penalty can be as much as half of the amount you should have withdrawn.
    • Must you spend the money you withdraw from your retirement account? You are not required to spend the money from your IRA after you withdraw it. You can reinvest it in a different taxable account if you do not need it, but not into a tax-deferred account. And, if you want to give the money in the IRA to a charity, you may distribute up to $100,000 from the IRA to the charity without paying any taxes on it.

    (Note: This article was updated to reflect the new withdrawal age of 72. It used to be 70.5)

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