U.S. President Joe Biden last month signed the $430 billion Inflation Reduction Act, authorizing the federal government to negotiate prices on some prescription drugs and cap costs for the government's Medicare health program.
Here is how the law may affect some of the 63 million Americans aged 65 or over or with disabilities who receive Medicare health benefits:In 2024, the government will start negotiating what it will pay for 10 drugs, with the new prices taking effect in 2026. They will be chosen from among some of the 50 medicines responsible for the highest Medicare spending that have no cheaper generic or biosimilar alternatives.
It also excludes generic drugs, such as most statins and blood pressure medicines, or less expensive versions of pricey biologic drugs known as biosimilars. Many rare disease drugs - typically some of the priciest on the market - also are excluded. According to a Kaiser Family Foundation analysis based on 2019 prices, if the 2029 parameters took effect this year, Medicare could negotiate the prices of 20 drugs that cost it $25.7 billion in 2019 and were used by about 7 million people, or 1-in-7 of those enrolled in the program that year.Beginning in 2025, everyone enrolled in Medicare will have out-of-pocket pharmacy drug costs capped at $2,000 per year.
In 2024, people enrolled in Medicare plans managed by insurers, called Medicare Advantage, may benefit from a cap on premium increases of 6% until 2030.
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