Key Takeaways
- Prescription drug costs for Medicare Part B beneficiaries will decrease for 54 medications starting October 1, 2024, thanks to the Medicare Prescription Drug Inflation Rebate Program.
- The Inflation Reduction Act is already saving Medicare users money on over 100 prescription drugs, with new price negotiations expected to save Medicare an estimated $6 billion.
- By 2025, all Medicare Part D beneficiaries will benefit from a $2,000 annual cap on out-of-pocket prescription drug costs, with some seeing their costs capped at $3,500 in 2024.
In a significant move to alleviate the financial burden on Medicare enrollees, the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), announced that starting October 1, 2024, some beneficiaries will pay less for 54 prescription drugs under Medicare Part B. This new rate will last until December 31, 2024. This cost reduction comes in response to drug companies raising the prices of these medications faster than the rate of inflation, affecting over 822,000 Medicare users annually for conditions like cancer and osteoporosis.
The Medicare Prescription Drug Inflation Rebate Program, a provision of the Inflation Reduction Act, has been a game-changer since its inception. Since April 1, 2023, Medicare users have already saved on over 100 prescription drugs. HHS Secretary Xavier Becerra emphasized that the program is designed to return money to the pockets of seniors and people with disabilities, fulfilling a promise made by President Biden and Vice President Harris to lower prescription drug costs.
Lowering Prescription Drug Costs and Expanding Savings for Medicare Beneficiaries
At an event in Pennsylvania, HHS Deputy Secretary Andrea Palm stated, “No one should have to choose between paying for their health care or putting food on the table.” The Act aims to bring down healthcare costs and ensure that Americans benefit directly. For example, cancer patients using the drug Kymriah could save up to $3,000 per day.
The Inflation Reduction Act’s reach extends beyond immediate savings. The CMS Administrator, Chiquita Brooks-LaSure, highlighted the importance of discouraging price increases above inflation and negotiating lower prices for some of the most expensive and frequently used drugs. These efforts have already led to agreements for new, lower prices for ten drugs, projected to save Medicare an estimated $6 billion if these prices had been effective last year.
By 2026, these negotiated prices will take effect, and Medicare Part D users are expected to save an estimated $1.5 billion in out-of-pocket costs. Starting in 2025, all Medicare Part D beneficiaries will benefit from a $2,000 cap on annual out-of-pocket prescription drug costs, with some already seeing their costs capped at around $3,500 in 2024.
Ensuring Long-Term Sustainability and Affordability for Medicare Through Drug Price Rebates
The Inflation Reduction Act requires drug companies to pay rebates to Medicare when prices exceed the rate of inflation for certain drugs. CMS plans to start invoicing these companies for owed rebates by fall 2025. The collected rebates will be deposited into the Federal Supplementary Medical Insurance Trust Fund, ensuring the long-term sustainability of the Medicare program for future generations.
The significant cost savings for Medicare enrollees underscore the effectiveness of the Inflation Reduction Act and its provisions. By curbing unchecked price hikes and negotiating lower drug prices, the Act has made substantial strides in reducing healthcare costs for millions of Americans. These measures not only offer immediate financial relief but also promise long-term sustainability and affordability for the Medicare program, benefiting current and future beneficiaries alike. Such initiatives reflect a robust commitment to enhancing healthcare access and affordability, ensuring that essential medications remain within reach for those who need them most.
Resource: Centers for Medicare & Medicaid Services, September 30, 2024
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