As discussed in a recent CMA Alert (Dec. 8, 2022), provisions of the Inflation Reduction Act (IRA) have begun to take effect, and other provisions are soon to follow. However, these historic changes are already being threatened by the pharmaceutical industry and their supporters in Congress.
- Insulin Copays Capped
Starting January 1, 2023, copayments for covered insulin products in Part D are now capped at $35 per month (with no deductible). Starting July 1, 2023, insulin furnished through durable medical equipment under Medicare Part B (such as insulin pumps) will be subject to the $35 per month cap (note that the Part B deductible will apply before then). Note that Part D plans do not have to cover all insulin products at this copay level, only those insulin products that are on the plan’s formulary.
- No Cost-sharing for Vaccines Covered under Part D
Effective January 1, 2023, cost-sharing for vaccines covered under Part D have been eliminated (even if an individual hasn’t met the Part D deductible). This applies to adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), including the shingles and Tetanus-Diphtheria-Whooping Cough vaccines.
- Drug Rebates
Behind the scenes, other provisions of the IRA are becoming effective in 2023, including checks on the annual rise in costs of drugs. Under this provision, drug companies will be required to pay rebates to the Medicare program if prices rise faster than inflation.
As noted in a New York Times article titled “Medicare Begins to Rein In Drug Costs for Older Americans” by Paula Span (Jan. 14, 2023) (which quotes the Center for Medicare Advocacy), “the Congressional Budget Office has estimated that this provision will save Medicare more than $56 billion over 10 years.”
As outlined in a Centers for Medicare & Medicaid Services (CMS) press release (Jan. 11, 2023), if this provision “had been in place from July 2021 to July 2022, more than 1,200 prescription drugs potentially would have been subject to the new provision requiring drug manufacturers to pay rebates to Medicare if they enact price increases that exceed inflation. Price increases on those drugs in the month the price change took effect averaged more than 30%.”
Similarly, as recently highlighted in an update issued by the Campaign for Sustainable Rx Pricing titled “ICYMI: Study Finds Medicare Part B Would Have Saved $3.7 Billion Over Three Years if Big Pharma’s Price Hikes Were Below the Rate of Inflation” an analysis published in the Journal of the American Medical Association (JAMA) found that “the Medicare Part B program would have saved $3.7 billion on prescription drug spending between 2018 and 2020” had this provision been in place during that time frame.
- Out of Pocket Caps Coming Soon
Less than a year from now (starting in 2024), the Part D 5% coinsurance above the catastrophic level will be eliminated, effectively capping out-of-pocket costs, and the following year (2025) this cap will be lowered to $2,000.
- Drug Negotiations
For the first time in the program’s history, Medicare has the authority to negotiate the prices for certain prescription drugs. As outlined in the above-referenced CMS press release and accompanying memo (Jan. 11, 2023), the first 10 drugs subject to Medicare negotiation (among the highest-spending, brand name drugs without competition), effective 2026, will be announced by September 1, 2023.
Unfortunately, even as these critical changes to the way Medicare pays for prescription drugs are being implemented, there are already efforts to undermine this progress. As noted in the above-referenced New York Times article, “Republicans in Congress, nearly all of whom voted against the Inflation Reduction Act, have already introduced legislation to repeal the measures intended to lower drug prices, and supporters are braced for court challenges, too.”
January 19, 2023 – D. Lipschutz