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Kealan Connors

The Effect of The Inflation Reduction Act of 2022

on Drug Prices and Patient Care

by Kealan Connors

You may wonder, “This is a consumer health website. Why is there an article about Inflation?” Good question. The answer is that a new piece of legislation goes far beyond the high grocery store prices that the American public is now dealing with. In reality, inflation affects medical costs, especially for individuals on Medicare.

Since the Covid-19 pandemic hit the world in the knee, an insulin shortage has occurred, causing the prices to sore at an astronomical rate. The prices would top at hundreds of dollars, and very few could afford it, even if a patient could find a place with insulin in stock. The Inflation Act of 2022 aims to stop this from happening. For anyone on Medicare, the cost of specific medicines will drop or be accessible in the next eight to ten years. Because the drug price changes were part of a larger legislation, this article hopes to educate patients on what lowering drug prices means in the long run.

What does this part of the act aim to accomplish?

This part of the act wants to make prescription drugs and health care more affordable. In more detail, The Health and Human Services Secretary- who advises the President on health matters for citizens - negotiated reductions on Medicare prescription drug prices for Parts B and D. Adding on to that, these negotiations will cap out-of-pocket expenses at 2,000. However, this specific benefit will start in 2025. 

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In addition to cap out-of-pocket expenses, some medications such as insulin medications, will have a co-pay cap of $35 dollars. Another benefit is, that elderly patients who are on Medicare Part D, can have the Shingrix vaccine for free. Before this, the Shingrix vaccine would cost $200 dollars per dose. At the start of 2023, the legislation penalizes drug companies if they raise Medicare drug prices faster than inflation by later this year. Those that do increase drug prices beyond inflation must pay the government the difference between the price charged and the inflation rate for all Medicare sales to reduce overall spending.

What is Medicare Part D?

In this Act, if a patient is on Medicare Part D, they are the center of attention. Medicare Part D refers to prescription drug plans that offer at least the standard level of coverage that Medicare requires. Private insurance companies sell and administer these plans. An individual with traditional Medicare who does not have the Medicare Advantage plan can sign up for and get Part D. While Part A and Part B cover hospital and medical coverage, they do not cover prescriptions, especially the ones that a patient takes home to use. This is what Part D was created for, so an individual can pay a monthly fee of 33 dollars so that they can pay for take-home prescriptions.

What other changes will happen with this act?

Next year in 2024, when a patient on Medicare Part D reaches the “catastrophic coverage” spending threshold, they will no longer need to pay any out-of-pocket costs. The threshold is projected to be $7,750 by 2024. If patients on Part D think that is good, starting in 2025, a new cap of $2,000 a year on out-of-pocket prescription drug spending will be enacted. Before, there was no limit on how much Part D enrollees have to pay out of pocket.

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What are these Drug Price Negotiations?

Since 2003, the federal government was forbidden to negotiate drug prices under Medicare Part D. Though, at the start of 2026, the  the government will negotiate the prices for ten prescription drugs, then by 2029, this number will rise to 20. In the course of the next ten years these negotiations are estimated to reduce government spending by roughly $100 billion dollars. Also, inflation caps on Medicare Part D are also added to the law.

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What will happen between 2026-2029?

● 2026 – 10 Medicare Part D drug prices will be negotiated and take effect by this year

● 2027 – 15 Medicare Part D drug prices will be negotiated and take effect by this year

● 2028 – 15 Medicare Part D or B drug prices will be negotiated and take effect by this year

● 2029 – 20 Medicare Part D or B drug prices will be negotiated and take effect by this year

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● In the following years - The Health and Human Services Secretary can continue to to negotiate 20 or more drug prices each year.

What Drugs could be on the Negotiation List?

There is no real way of knowing which prescription drugs are going to be on this “list” on the negotiation table, though some names have come up more than once in conversation in Washington. Here are a few:

● Bristol-Myers’ Eliquis

● J&J’s Xarelto

● Merck’s Januvia

● Abbvie’s Imbruvica

● Merck’s Keytruda

● Regeneron’s Eylea

● Amgen’s Prolia

● Bristol Myers’ Opdivo

● Roche’s Rituxan

How will this affect the average American's health care coverage?

The passing of the Inflation Reduction Act of 2022 will hopefully continue making Medicare more equitable and inclusive for every American, and maybe one day, patients will not have to struggle paying for medical treatments and prescriptions.