The bill that put a $35 monthly cap on insulin and allowed Medicare to negotiate the prices of other drugs turned two on Friday.
Ex-president Donald Trump is trying to take credit for the cuts in prices on insulin and other drugs, but it was the Inflation Reduction Act, which narrowly passed the House and Senate in 2022, before being signed into law by President Biden, that did the trick.
You can bet that it wouldn’t have passed after Republicans took back control of the House in early 2023, given the GOP’s aversion to anything that might have made the president and Democrats look good.
One key reason why: the IRA requires drug companies to pay a rebate to Medicare if they raise prices faster than the rate of inflation, in the face of a rule approved by the Trump administration in its final weeks in late 2020 that would have eliminated rebates negotiated between drug manufacturers and pharmacy benefit managers in Medicare Part D, which was expected to increase premiums for Medicare Part D enrollees, according to the Congressional Budget Office.
You see whose side the Trump folks were on there.
ICYMI: not yours.
“Thanks to the IRA, Medicare has begun negotiating drug prices for the very first time—and the results of the initial round of negotiations that were announced yesterday will save older Americans $1.5 billion and the federal budget $6 billion in the first year of implementation alone,” U.S. Sen. Tim Kaine, D-Va., said in a statement on Friday, referencing the announcement from the Biden administration on Thursday that it has negotiated price cuts of between 38 percent and 79 percent for each of the 10 drugs that cost the program the most money.
“In the two years since we got the IRA done, we’ve already seen historic efforts to bring down the skyrocketing costs of insulin and other prescription drugs, critical job-creating investments across the Commonwealth, and lower healthcare premiums for hundreds of thousands of Virginians. The best part is that we’re just getting started,” U.S. Sen. Mark Warner, D-Va., said in a statement on Friday.
Highlights of the Inflation Reduction Act
- $35 cap on the cost of insulin: Out-of-pocket costs for insulin—regardless of how much a patient needs—are capped at $35 per month under Medicare. Thanks to the IRA, 36,461 Virginians on Medicare who use insulin now pay no more than $35 per month.
- Free vaccines for Medicare recipients: People with Medicare no longer have to pay to receive most vaccines under Medicare Part D, which includes vaccines for shingles, HPV, MMR, diphtheria, and pertussis. In 2023, over 230,000 seniors in Virginia received a recommended vaccine free of cost.
- Extension of ACA subsidies: During the pandemic, Congress enhanced subsidies under the Affordable Care Act (ACA) to help lower health care premiums for millions of Americans. The IRA extended these enhanced subsidies through 2025 to help make Virginians’ health insurance more affordable. 350,008 Virginians with ACA coverage are receiving assistance to lower the cost of their premium. In 2022, Virginians saved an average of $508 per month on their health insurance premium.
- Lower Premiums for More Than 500,000 Virginians: There are additional provisions that went into effect to limit annual premium increases for Americans, including more than 500,000 Virginians enrolled in Medicare Part D.
- Penalties on drug manufacturers that increase prices: Manufacturers are required to keep the increase in the cost of their drugs at or below inflation.
- Black lung benefits: The law permanently extended the black lung excise tax at a higher rate, providing more certainty for miners, miner retirees, and their families who rely on the fund to access benefits. In Virginia, thousands of miners and their families have received benefits through the trust fund since it was established, including approximately 2,600 Virginians in 2021.
Still to come
While many provisions in the IRA have already been implemented, there are additional provisions that will begin later this year or in the years to come.
- Cap on out-of-pocket costs on prescription drugs: Beginning in 2025, there will be a $2,000 cap on out-of-pocket costs on prescription drugs for seniors covered under Medicare Part D. Some estimates have shown that Virginia seniors on Medicare will save an average of $440.62 on out-of-pocket costs on prescription drugs thanks to this cap.