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How Prescription Drug Negotiations Will Impact Medicare Beneficiaries

How Prescription Drug Negotiations Will Impact Medicare Beneficiaries
How Prescription Drug Negotiations Will Impact Medicare Beneficiaries – The 2022 IRA is legislation that will affect Americans in many ways.  While the bill aims to reduce inflation and address energy issues, it also includes provisions that would lower the cost of prescription drugs, especially for people with Medicare.

Among its key provisions that affect drug costs, an IRA allows you to negotiate the cost of some expensive prescription drugs.

Fixed Assets

  • The Inflationary Reduction Act (IRA) of 2022 allows Medicare to negotiate drug prices for the first time in history.
  • Medicare will follow a phased plan starting in 2026 to negotiate 10 to 20 more expensive drugs each year.
  • Medicines will be given at higher prices. Only Medicare Part D users are eligible for the discounted price.

What is the Inflation Control Act of 2022 (IRA)?

The Inflation Reduction Act of 2022 (IRA) is a law signed into law by President Biden on August 16, 2022. This is a smaller version of the Build Back Better Act. Despite significant cuts in the Build Back Better Act, many proposed issues remain unaddressed, including investing in clean energy, closing tax loopholes, reducing the deficit, and reducing health care costs, including prescription drug costs.

How can an IRA save money on prescription drugs?

Prescription drug coverage is only included in Medicare Part D or some Medicare Advantage plans.  Medicare Part D was first introduced in 2003 as part of the Medicare Prescription Drug Improvement and Modernization Act (MMA).

The program is designed to reduce drug costs by providing coverage for certain prescriptions.  However, the original bill included a provision that prohibited the federal government from negotiating drug prices with pharmaceutical companies.

Deflation laws changed that. The Secretary of the U.S. Department of Health and Human Services (HHS) now has the authority and responsibility to negotiate prices for certain drugs. Starting in 2026, prices for 10 Medicare Part D drugs will be negotiated. Another 15 drugs are due to be renegotiated in 2027.  We plan to select 15 Part B and Part D drugs in 2028 and an additional 20 drugs in 2029.

The drugs for which prices are negotiated will be expensive drugs that do not include generics or biosimilars.  In addition, it has been at least 9 years since the U.S. Food and Drug Administration (FDA) approved small molecule drugs and at least 13 years for biologics.  The U.S. Secretary of Health and Human Services will review a list of the 50 most expensive drugs that qualify. These drugs are commonly used to treat cancer, rheumatoid arthritis, and diabetes.

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Fixed prices are governed by a specific formula that determines maximum fair value (MFP).  Prices for most drugs are expected to fall by 25-65%.

The White House estimates that negotiations with drug companies could significantly lower prescription drug prices for 5 to 7 million people. White house.  “Looking at the Numbers: How to Lower Inflation.”

Medicare Part D is optional, but if you don’t choose it, you won’t get the discounted prices Medicare can negotiate for certain high-cost drugs.

Another recipe for cost-saving measures

In addition to the ability to negotiate prices, IRAs also require drug companies that move prices faster than inflation to pay Medicare rebates.  Another provision limits out-of-pocket costs to $2,000 in Medicare Part D starting in 2025. There is a maximum $35 monthly out-of-pocket cost for insulin under Medicare Part D and Part B when administered via durable medical equipment from the outset.

Should you have Medicare Part D?

No, you are not required to have Medicare Part D. Medicare Part D is an optional plan that only covers prescription drugs.  Some medications may be covered by Medicare Part B, but usually they will be administered via long-term medical equipment such as a nebulizer or infusion pump.  Most other drugs are used to treat some d.

When Did Prescription Drugs Drop?

Some provisions of the Inflation Reduction Act (IRA) that reduce prescription drug costs, such as caps on insulin costs, will take effect in 2023. Rebates for costs that exceed inflation in 2023. Defeated drug treatment for some prescription drugs goes into effect in 2026.

How does Medicare choose which drugs to cover?

There will be specific criteria regarding medications that can be treated.  The product must not be a generic or biosimilar product and has been approved by the US Food and Drug Administration (FDA) for at least nine and 13 years, respectively. The US Secretary of Health and Human Services will select from the 50 most expensive drugs those that meet these criteria.


The Inflation Reduction Act (IRA) has the potential to significantly lower drug prices for those who need it most, but relief will not come immediately.  New price negotiations will begin in 2026, and only the most expensive drugs without generics or biosimilars will be considered.  Peleus started using insulin in 2013.

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