Starting next month, a $35 cap on insulin prices will go into effect for millions of Medicare beneficiaries. The price cut is one of the first of several policy moves Americans will see in the months and years to come under the Cut Inflation Act signed into law in August.
The bill also requires drug companies to pay rebates for drugs whose prices exceed inflation for Medicare Part D and requires the government to negotiate drug prices on certain prescription drugs for people on Medicare — the first time Medicare has been given this power. While it’s unclear how many people will ultimately benefit from the various changes, 49 million people are enrolled in Medicare Part D plans, according to the Kaiser Family Foundation.
Medicare Part D reimbursements began in October. That same month, Medicare also began paying more for certain biosimilar drugs to create more competition, reduce costs, and improve consumer access to these drugs. Biosimilars are medicines that are very similar to an existing medicine and whose average selling price is no higher than that of the other medicine.
The insulin cap that takes effect next month benefits Medicare Part D beneficiaries, who also no longer have to pay a deductible on their insulin. $35 cap on insulin pumps for Medicare Part B beneficiaries goes into effect July 1 according Medicare and Medicaid Service Centers.
The bill is designed for Medicare to negotiate the drugs that have the highest overall expense, so it really gives you the best value.
– Emily Gee, Center for American Progress
Richard Frank, a senior economics researcher and director of the University of Southern California-Brookings Schaeffer Initiative on Health Policy, said there were several reasons why the law lowered the cost of insulin before others. measures.
“The whole story of healthcare reform in this country is that you really want to try to deliver real benefits to real people. And insulin, because of the relative technical simplicity, is a great place for that. You’re giving to the sick who really need help, and where there’s been a lot of crazy cost-sharing for patients, earlier, so the benefits of the legislation start to kick in pretty quickly,” did he declare.
Medicare patients spent $1 billion on insulin in 2020, according to the Kaiser Family Foundation, and about 16.5% of people with diabetes rationed their insulin in the past year, which can be extremely harmful to your health. their health, according an article from the Annals of Internal Medicine published in October.
But the Department of Health and Human Services drug price negotiation process will take much longer. This process will apply to certain types of drugs, including biologics, or drugs from biological sources such as sugars or proteins that have no generic or biosimilar competitors, or branded drugs whose company owns the patent, known as single-source drugs. Here is the timeline:
- In September, the Centers for Medicare and Medicaid Services will list the 10 Part D drugs whose negotiated prices will take effect in 2026. Negotiations begin in October and end in August 2024, according Kaiser Family Foundation Timeline.
- Another round of negotiations for 15 Part D drugs begins in February 2025 and ends in November 2025, with prices due to take effect in 2027.
- The negotiation process for 15 Part D or Part B drugs begins in 2026 and prices will take effect in 2028.
- In 2027, 20 Part D or Part B drugs will be announced, and in 2029, these prices will hit consumers.
- In 2028, another 20 Part D and Part B drugs would be selected for full implementation in 2030.
- The last round 20 Part B and D drug prices would be observed in 2031.
“The bill is designed for Medicare to negotiate the drugs that have the highest overall spending, so it really gives you the best value,” said Emily Gee, vice president and health policy coordinator. at the Center for American Progress. .
Price changes should start to have a real impact on Americans in 2026. “They’ll get about a 30% discount on that deductible portion of their drug in many cases. Most people would notice that,” Frank said.
According an analysis of the impact of the Inflation Reduction Act from the Center for American Progress, an older middle-class couple living in Pittsburgh, where one person has diabetes and takes insulin, could save $575 on insulin each year starting next year, and as much as $2,430 a year for their household – due to the $2,000 limit on annual disbursements – starting in 2025.
How will pharma react?
A US Department of Health and Human Services report published in September showed that drug companies raised the prices of several drugs by more than 500% between 2016 and 2022, and some experts fear drug companies could find loopholes in the new law.
Juliette Cubanski, deputy program director for health insurance policy at the Kaiser Family Foundation, said there may not be much drug companies can do to prevent being selected for the first negotiation process at this stage. But in general, they might try to raise obstacles to implementation, for example by raising legal challenges against the law. Cubanski said another response could be higher introductory prices for new drugs.
“That’s just one of the side effects of this legislation that we can’t really control in this country because we don’t have any sort of organized approach to pricing drugs like other countries do.” , Cubanski said. “The Inflation Reduction Act provisions should be useful in limiting the growth of existing drug prices, but contain no provision to limit the level at which drug prices are set for new drugs entering the market. .”
The government can only negotiate for drugs that have been on the market for a certain number of years – nine years for small molecule drugs, usually pills, including some cancer treatments, and 13 for biologics, which use living cells and are difficult and more expensive to manufacture.
“I think pharmaceutical companies are trying to bring innovative products to market because there’s, I think, a recognition within the pharmaceutical industry that that’s where they kind of have the upper hand on pricing and price negotiations – when we’re talking about drugs that are really unique and innovative and don’t have competing products,” Cubanski said.
She added that the possibilities for reaction from pharmaceutical companies are largely unknown at this stage, as there is still much to do at the political level.
They could also try to shift their financial burden to the private insurance market or use citizen petitions to try to keep generic drugs from being approved by the FDA, at least for a while, NBC News reported.
Gee said she sees these messages about cost shifting or raising introductory prices as a scare tactic on the part of drug companies and said there is nothing really stopping them from raising prices now.
“But there’s very little discipline for them now because the market is so concentrated,” she said. “If they could raise their price another $10, why wouldn’t they do it now? It’s hard to see why they would leave money on the table today.
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