The Inflation Reduction Act’s Winner and Losers

INTERVIEW ON THE PRICE OF BUSINESS SHOW, MEDIA PARTNER OF THIS SITE.

Recently Kevin Price, Host of the nationally syndicated Price of Business Show, interviewed Dr. David Wilcox.

Health Transparency: The Real Truth with Dr. David Wilcox  

Prescription drug costs are consistently one of voters’ top health care concerns. The average price of brand-name drugs in Medicare Part D, which covers medications at the pharmacy counter, more than tripled between 2009 and 2018. A new survey from West Health and Gallup recently found that nearly 40% of American adults say they have skipped or delayed health care treatment or cut other spending in the last six months because of high health care costs. 

The Inflation Reduction Act that was signed into law on August 16^th of 2022. This law has some significant impacts to healthcare with Medicare recipients being the clearly defined winners. For the first time since Medicare Part D was put into effect in 2003, Medicare will now be allowed to negotiate drug prices. However, this doesn’t begin until 2026 and even then only covers 10 drugs initially leaving the pharmaceutical companies plenty of time to refine their strategy. Here are the major changes you can expect to see from this legislation as well as the timeline of events. 

• Medicare will begin to negotiate prescription drug prices. 
  • 10 drugs can be negotiated starting in 2026 
  • 15 drugs can be negotiated starting in 2027 
  • 20 drugs can be negotiated every year beginning in 2029 
• Out of pocket medication costs are capped for Medicare part D and Medicare Advantage plans to $2000 a year beginning in 2025 with the option to break that amount into monthly payments. This is a huge wine because Right now, Medicare beneficiaries, who often have fixed incomes, have no out-of-pocket maximum for drug costs. Once they reach $7,050 in a year, they pay 5% of subsequent costs. Paying 5% of drug costs might not sound like a lot, but when paying for expensive drugs, it can add up quickly. Under the new bill, they will not pay any costs for medications once they reach $2,000 in a year. 
• For Medicare recipients,  insulin will be capped at $35 a month out of pocket cost. Politicians successfully stripped a provision that would have extended the cap to private plans as well meaning insured and uninsured Americans will most likely bear the brunt of additional costs in this situation. 
• The legislation would also extend enhanced ACA federal health insurance subsidies for another three years. The boosted subsidies helped fuel a record 14.5 million signups for the ACA exchanges this year. The extension will prevent an estimated 3.4 million Americans from losing health coverage. The extension lasts until 2025. 
• Drug companies will be required to rebate back price differences to Medicare if they raise prices higher than the rate of inflation, coined an “inflation rebate.” The Part B inflation rebate goes into effect in Q1 2023. The Part D inflation rebate goes into effect annually, starting with the one-year period beginning on October 1, 2022 
• The legislation makes all vaccines covered under Medicare Part D free to beneficiaries with no deductibles, co-insurance, or cost-sharing, starting in 2023. 
• If drugmakers do not comply with the price proposed by HHS when drug price negotiation begins in 2026, they face a tax on sales of the drug ranging from 65 percent to 95 percent. The drug’s sales revenues will be taxed 65 percent during the first 90 days of noncompliance, 75 percent for sales in the 91st to 180th days of noncompliance, 85 percent for sales in the 181st to 270th days of noncompliance, and 95 percent for sales after the 270th day of noncompliance. 

How this law will impact insured and uninsured Americans remains to be seen. The pharmaceutical entities are beholden to their stockholders and still remain largely unregulated for insured and uninsured Americans. Those of us in the industry strongly believe that this group of Americans will see the cost of prescription medications increase to offset the Medicare savings. Thus making this a budget neutral option for the pharmaceutical companies and making the average insured/ uninsured American the loser of this legislation. 

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You can purchase Dr. David Wilcox’s book How to Avoid Being a Victim of the American Healthcare System: A Patient’s Handbook for Survival on Amazon at the following link https://lnkd.in/diZKYC2 

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LISTEN TO THE INTERVIEW IN ITS ENTIRETY HERE