Budget Bill Allowing Medicare to Negotiate Drug Prices Heads to House

HR 5376, or the Inflation Reduction Act, is most significant piece of legislation affecting federal health policy since the passage of the Affordable Care Act in 2010; for Medicare beneficiaries, it caps insulin at $35 a month and includes other pricing reforms.

Advocates for patients who take insulin to manage their diabetes or other drugs for chronic conditions reacted positively at the passage of the budget bill that passed in the Senate on Sunday, which allows Medicare to negotiate the prices of some prescription drugs and caps the cost of insulin for beneficiaries at $35 a month.

The Senate passed the bill 51-50, with Vice President Kamala Harris breaking the tie. The bill, which now heads to the House, is a scaled-back version of President Joe Biden’s original domestic policy plan.

HR 5376, or the Inflation Reduction Act, is also the most significant piece of legislation affecting federal health policy since the passage of the Affordable Care Act (ACA) in 2010.

According to a Reuters/Ipsos poll conducted last week, 49% of Americans support the bill, including 69% of Democrats and 34% of Republicans. The most popular part of the bill is giving Medicare the power to negotiate drug prices, which 71% of respondents support, including 68% of Republicans.

Voting on the bill began Saturday and went into Sunday. It would raise about $739 billion in new revenue from a 15% corporate minimum tax, increased IRS enforcement, and drug pricing reforms. It would spend $369 billion on climate and energy inititaives and $64 billion extend ACA subsidy increases, instituted during the pandemic, for another 3 years. The subsidies were set to expire at the end of this year.

Democrats originally extended the $35 a month insulin cap beyond Medicare beneficiaries, allowing it to apply to those on private insurance. But on Sunday, the Senate parliamentarian ruled that the cap could apply on a government program (ie, Medicare), but not on private insurance. Democrats then separated the 2 measures, but Republicans blocked the measure for private insurance.

“Insulin access is a matter of life or death for people with [type 1 diabates] T1D, which is why it is unconscionable that 43 members of the US Senate voted today to strip away provisions from the budget bill to cap the out-of-pocket costs of insulin for those with commercial health insurance," read a statement from the JDRF.

Other health care related measures include:

  • Capping out-of-pocket (OOP) costs for Medicare Part D prescription drugs at $2000 a year, starting in 2025
  • Capping Part D premiums increases at no more 6% a year through at least 2029
  • Increasing the income threshold for beneficiaries to qualify for a subsidy to help pay for Part D OOP costs, from 130% of the federal poverty level to 150%
  • Allowing Medicare to negotiate prices for 10 high-cost prescription drugs starting in 2023, with the new price taking effect in 2026, with the number of drugs affected rising each year until 2029

The nonpartisan Congressional Budget Office estimates Medicare would save $101.8 billion over 10 years by negotiating drug prices.

"Prescription drugs don’t work if patients can’t afford them–yet today nearly 1 in 3 Americans finds themselves unable to pay for the medications they need," according to a statement from philanthropists John and Laura Arnold of Arnold Ventures. "It is disappointing, however, that the inflation rebate provisions intended to keep rapid price escalations in check won’t ultimately be extended to all Americans."

The Arnolds, who fund the Institute for Clinical and Economic Review throught their philanthropic efforts, were referring to another piece of the bill that would keep pharmaceutical companies from raising drug prices more than the cost of inflation for Medicare beneficiaries.

President and CEO Stephen J. Ubl, who heads the Pharmaceutical Research and Manufacturers of America, called the vote "a tragic loss for patients. This drug pricing plan is based on a litany of false promises."

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