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Big Pharma's Price Hikes: How The Inflation Reduction Act is Alleviating the Burden on Seniors

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Dr. Jessica Nelson
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Big Pharma's Price Hikes: How The Inflation Reduction Act is Alleviating the Burden on Seniors

Big Pharma's Price Hikes: How The Inflation Reduction Act is Alleviating the Burden on Seniors

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In recent months, Big Pharma has implemented price hikes that exceed the rate of inflation, creating a financial burden for over 750,000 seniors who depend on Medicare Part B drugs. This has led to calls for lawmakers to hold these pharmaceutical companies accountable for their actions.

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The Inflation Reduction Act: A Beacon of Hope

President Biden's Inflation Reduction Act (IRA) is a comprehensive response to this pressing issue. The Act mandates pharmaceutical companies to pay rebates to Medicare if they raise prices on prescription drugs faster than the rate of inflation. This initiative has the potential to save seniors between $1 and $2,786 per dose. Furthermore, the IRA allows Medicare to directly negotiate lower prescription drug prices and has capped the cost of insulin for Medicare beneficiaries at $35 per month.

Negotiations and Cost Savings for Medicare Beneficiaries

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In 2022, Medicare Part D beneficiaries paid $3.4 billion in out-of-pocket costs for the 10 drugs selected for negotiation. These selected drugs make up nearly 20% of spending in the Medicare Part D drug benefit. The negotiated prices are expected to go into effect for seniors in 2026, promising significant future cost savings for millions of Americans.

Addressing Outrageous Price Hikes

The Biden administration identified 48 drugs in the Medicare program whose prices rose quicker than inflation, requiring their makers to pay rebates. The beneficiaries of Medicare Part B could benefit from a reduction in their co-insurance payment for any of these drugs. The IRA aims to save $25 billion annually by 2031 by requiring drugmakers to negotiate the prices of selected expensive drugs with the U.S. Centers for Medicare and Medicaid Service.

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Impact of Price Hikes and The Potential for Savings

The U.S. Department of Health and Human Services issued a report reviewing the 10 drugs selected for the first cycle of Medicare drug price negotiations under the IRA. The report revealed that total Medicare Part D spending on these 10 prescription drugs more than doubled from 2018 to 2022. Negotiating prices on these drugs has the potential for significant savings to enrollees, taxpayers, and the Medicare program.

Lower Co-insurance and Fair Pricing

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Additionally, the Centers for Medicare & Medicaid Services released a list of 48 prescription drugs for which Part B beneficiary coinsurances may be lower between January 1, 2024, and March 31, 2024, due to the IRA's inflation rebate provision. Medicare enrollees may experience coinsurance amounts that are as much as 618 lower per average dose than what they would have paid without the coinsurance adjustment. The Administration for Strategic Preparedness and Response is making fair pricing a standard part of contract negotiations for medical products, demonstrating a commitment to obtain the best value for the US taxpayer.

Looking Ahead: A More Affordable Future

The Inflation Reduction Act is making strides in increasing the accessibility and affordability of prescription drugs for the 65 million Medicare beneficiaries. By reducing the rate of growth in Medicare drug spending, it's also improving the financial sustainability of the Medicare program. As we look ahead, this Act serves as a crucial step toward a more affordable and accessible healthcare future for all Americans.

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