On August 16, 2022, President Joe Biden signed the Inflation Reduction Act (IRA) into law. In addition to historic measures on tax fairness and climate change, the IRA made major improvements to the Medicare program: capping insulin costs at $35/month, making recommended vaccines free for seniors, instituting a $2,000 annual out-of-pocket prescription cost cap, forcing Big Pharma to pay a fine if they raise the price of medication faster than the rate of inflation, and finally enabling Medicare to negotiate directly for lower drug prices.
The new law is already saving millions of dollars in Medicare and lowering costs for seniors and people with disabilities who have struggled with affordability on everything from insulin to cancer drugs. Once it’s fully implemented, the law’s centerpiece, Medicare negotiations, will save 5 to 7 million seniors money on some of the most expensive medicines covered under Medicare.
Not only is this progress on prescription affordability worthy of celebration, it’s also ripe for expansion. Medicare is the nation’s largest purchaser of prescriptions, but by no means are Medicare patients alone in struggling to afford prescription medicines. In fact, people of all ages have to ration, skip doses, go into debt or forgo other necessities to afford drugs because the drug corporations have monopoly power to set prices and raise them anytime. We need a national solution that addresses the fact that Americans pay two to three times more than people in other countries for the same medicines.
Yet, while some lawmakers in Congress are forging forward to build on the success of the Inflation Reduction Act, all too many are trying to repeal or roll back the new law before it’s even implemented. NJ Congressman Frank Pallone, a key architect of the original reforms that were included in the IRA has already filed a new bill to expand negotiations, the insulin cap and accountability for drug corporation price gouging in the 118th Congress. If passed, that bill could lower costs for millions more people in Medicare and for hundreds of billions with private coverage who don’t yet qualify for Medicare.
Pallone’s leadership stands in stark contrast to some of his colleagues in the US House of Representatives who are actively trying to repeal the modest reforms in the existing law just one year after its passage. Led by Tennessee Republican Andrew Ogles, 23 GOP Members of the House are pushing a bill to repeal the law as their allies in Big Pharma file lawsuits to overturn Medicare negotiations. Johnson & Johnson, Astellas, Bristol Myers Squibb, and Merck joined the U.S. Chamber of Commerce and industry lobby group PhRMA to sue Medicare in an attempt to block their new negotiating power.
This comes as no surprise given the massive profits that drug corporations have made by exercising monopoly power over prices.. According to new reporting from AARP, the 25 drugs responsible for the highest Medicare Part D spending have nearly tripled in price since their introduction. In 2021, the program paid nearly $81 billion on these medications alone, some of which are relied upon by millions of patients. Bristol Myers Squibb’s Eliquis, for example, a blood thinner prescribed to more than 3 million Americans, has increased in price by 124% since it was first introduced. Given the profit to be made off of drugs like Eliquis, Big Pharma is working overtime to hold onto their monopoly price-setting power.
One year after its signing, seniors and people with disabilities who get their health coverage through Medicare are seeing the benefits of the Inflation Reduction Act. Insulin costs, which have historically been prohibitive for so many patients, are capped at $35 per month, making pharmacy trips far cheaper for millions. More than 3.4 million people will benefit from the law’s free vaccine provision, meaning better health overall.
Experts predict that Medicare negotiations will make medicines more affordable for 5-7 million seniors across the country and save taxpayers $237 million over 10 years. The Inflation Reduction Act’s redesign of Medicare Part D, including the $2,000 out-of-pocket cap, is expected to lower out-of-pocket spending by about $7.4 billion annually among more than 18.7 million enrollees (36 percent of Part D enrollees) in 2025. That’s a savings of nearly $400 per person.
Today, we celebrate the historic progress of the IRA while at the same calling out Big Pharma’s attempts to protect their profits and shining a spotlight on their allies in Congress who support keeping prices high. We’re on a Countdown to Lower Drug Costs as we push for full implementation of the law that will finally make medicines more affordable for millions of Medicare patients who have already waited too long.