Article Summary –
The Biden administration plans to expand the Inflation Reduction Act’s Drug Price Negotiation Program to lower medication and healthcare costs, increasing the negotiation cap from 20 to 50 drugs annually. The expansion includes increased rebates for pharma manufacturers whose drug prices outpace inflation, application to all private insurance providers of the $2000 prescription drug out-of-pocket spending cap, and a new program capping Medicare Part D cost-sharing for certain generic drugs at $2. The proposed changes come after a bill introduced by Democratic lawmakers to expand the drug negotiation program to include people with private insurance, and aim to generate roughly $25 billion in annual drug cost savings for the federal government by 2031.
Biden Administration Unveils Plans to Lower Medication and Healthcare Costs
Pictured: The White House in Washington, DC/iStock, lucky-photographer
Prior to the State of the Union address, the Biden administration plans to expand the Inflation Reduction Act’s Drug Price Negotiation Program to cut medication and healthcare costs.
The focus is on increasing the current negotiation cap from 20 to 50 drugs annually, targeting medications essential for seniors including heart, cancer, and diabetes drugs.
The plan entails expanding rebates that pharma manufacturers pay if their drug price exceeds inflation. Biden urges Congress to require these fees for commercial and Medicare drug sales.
The administration also plans to extend the $2,000 cap on out-of-pocket expenses for prescription drugs to all Medicare beneficiaries by 2025.
To ensure affordability, Biden is requesting Congress to apply this spending limit to all private insurance providers, promising that Americans will no longer have to choose between prescriptions or necessities.
The administration aims to start a new program capping Medicare Part D cost-sharing at $2 for selected generic drugs, including statins, beta-blockers, and platelet inhibitors.
Biden will mention these proposals in his State of the Union address.
These plans follow a legislative bill introduced by Democratic House Representatives to expand the IRA vastly. This proposal aims to include 164 million workers and their families with private insurance in the drug negotiation program.
The IRA, signed into law by Biden in August 2022, aims to yield around $25 billion in yearly drug cost savings by 2031 through Medicare Drug Price Negotiation Program, enabling CMS to negotiate widely prescribed medicine prices from 2026.
Incubate’s executive director, John Stanford, stated that the move to expand the IRA is expected, considering 2024 is a presidential election year. However, he expressed disappointment over the decision, saying it’s premature to expand a program yet to be fully implemented.
The drug price negotiations under the IRA began on Feb. 1, 2024, with CMS sending initial maximum fair proposals to pharma companies. According to administration, all manufacturers are participating and have submitted their counteroffers.
The negotiations will continue until Aug. 1, 2024, with CMS set to publish the final prices on Sept. 1, 2024.
Executive Director of No Patient Left Behind, Peter Rubin, suggested that instead of expanding price controls, long-term reduction could be achieved by addressing the IRA’s ‘pill penalty,’ already affecting new drug R&D on aging diseases and other conditions.
An IRA provision exempts biologics from price negotiations for 13 years post-approval, while small molecules only have a nine-year grace period. A disparity that some industry stakeholders and lawmakers argue hinders investment and innovation.
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