The Inflation Reduction Act – signed into law by President Biden in August – includes several provisions that could significantly lower health care costs for individuals enrolled in Medicare.
The act includes a Medicare drug price negotiation program, which will allow the government to negotiate a set number of drug prices with pharmaceutical companies for those on Medicare.
Beginning in 2026, Medicare will be able to choose 10 Part D (over the counter) drugs for which to negotiate prices. The drugs chosen must be from a list of the 50 most expensive brand-name drugs without competition, meaning those with no generic alternative. Drugs are only available for negotiation nine years after FDA approval for “small molecule drugs” and 13 years for more complex “biologic” drugs, according to a press release from the National Council on Aging. The act also excludes drugs with less than $200 million in annual sales.
In 2027, the government can negotiate 15 more drug prices for Medicare consumers and an additional 20 more in 2029. Eventually, Medicare Part B drugs (clinician-administered) will be included in this program.
“And understand what that means: It means, yes, we’re changing the game,” Vice President Kamala Harris said in a Sept. 1 statement. “But it also means this, in terms of breaking down the issue: It means that our seniors should not be out there having to fight for themselves against these powerful interests at a stage of life where they have earned the right to be treated with dignity by their community and their society and their nation.”
Manufacturers of certain Medicare Part D drugs would also have to reimburse Medicare if their drug price increases faster than inflation.
Additionally, those on Medicare will have a max of $2,000 for out-of-pocket spending on prescription drugs beginning in 2025. (The previous maximum was $7,000.)
The Medicare Part D Low-Income Subsidy benefit, also known as the Part D Extra Help program, will expand in 2024 to include people making up to 150% of the poverty limit, according to AARP. This applies to individuals making less than $20,385 a year or couples making $27,465 a year. The program covers the annual Part D premium, deductibles, and some copays and coinsurance costs until individuals reach the out-of-pocket spending max, or catastrophic phase.
Under the Inflation Reduction Act, hearing aids for those with mild-to-moderate hearing loss can be purchased over the counter. This is expected to drastically lower the cost of hearing aids, making them more accessible.
Other provisions in the legislation include a cap of $35 per month for insulin on Medicare, no co-pays for vaccinations on Medicare, and an extension of the ACA Marketplace premium subsidies for three years.
While thankful for the portions of the Inflation Reduction Act that will lower health care costs for those on Medicare, Nicole Jorwic, chief of advocacy and campaigns at Caring Across Generations, said she would have liked to see expanded caregiving services included in the finalized legislation.
“We know that family caregivers are currently filling in the gaps with the service system that currently has almost a million people on waiting lists,” she said. “And we also know that in the pandemic, where obviously, a lot of the deaths were occurring in facility-based care, we need to expand the infrastructure in the system that provides those same supports and services in the home.”