President Biden signed the historic Inflation Reduction Act (IRA) into law one year ago today. It was the first time Congress enacted major legislation to take on Big Pharma and lower the price of prescription drugs for seniors.  For us, the IRA was the culmination of a 20 year struggle to reform Medicare Part D — the prescription drug benefit — so that seniors actually could afford crucial medications.  We had seen too many statistics over the years about older Americans cutting pills in half or not filling prescriptions because of high costs — or having to choose between essentials like food and medicine. 

“We took on Big Pharma, and we won,” proclaimed President Biden after the IRA was enacted. Though the IRA cannot solve the entire drug pricing problem, it will provide relief to millions of American seniors. Here are its major provisions: 

*Empowers Medicare to negotiate prices with drug-makers

*Caps Medicare Part D patients’ annual out-of-pocket payments at $2,000

*Caps the cost of insulin for Part D patients at $35/month

*Penalizes drug-makers for raising prices above the rate of inflation

The IRA’s most historic aspect is the drug price negotiation provision – more modest than originally envisioned, but still extremely significant. At first, only ten drugs will be eligible for negotiations, and new brand-name drugs are excluded. Negotiated prices will not take effect until 2026. But Big Pharma opposed these relatively modest measures, and is currently trying to block them in court.

Undaunted, the Biden administration has been spending the past year fleshing out rules for implementing the Inflation Reduction Act’s drug pricing provisions. 

“Starting this year, Medicare will begin to negotiate directly with drug manufacturers to bring down the price of covered high-cost prescription drugs. CMS will announce the first 10 drugs selected for negotiation by September 1, 2023. The first round of negotiations will occur during 2023 and 2024. The prices that are negotiated will be effective starting in 2026.” – Center for Medicare & Medicaid Services, 6/30/23 

In March, CMS released initial guidance on the drug price negotiation process, outlining “how the agency will select drugs for negotiation this year and how those negotiations will be conducted.” At the end of June, CMS released a revised framework, “informed by public input,” for how the government will negotiate with drugmakers on a maximum fair price for selected drugs.  This, the agency says, will ensure “that Medicare beneficiaries have access to innovative, life-saving treatments” at a lower cost for patients and for the Medicare program itself.

On July 1st, the Inflation Reduction Act’s cap on insulin costs for Medicare patients went into effect.  Beneficiaries will pay no more than $35/month for insulin. Insulin prices had soared nearly 40% from 2014-2018, and patients’ out-of-pocket costs were running from $300 to $1,000 per month.  Over the years, we heard heartbreaking stories about diabetics who rationed insulin because of the high cost and ended up gravely ill or dead. In addition to lowering prices, the Inflation Reduction Act can truly be a lifesaver.

The IRA’s cap on out-of-pocket drug costs for Medicare Part D beneficiaries is especially crucial for patients with serious chronic conditions like cancer or multiple sclerosis.  As Kaiser Family Foundation reported, out-of-pocket costs for medications to treat those conditions can be staggering – especially for seniors on fixed incomes:

“For example, in 2020, among Part D enrollees without low-income subsidies, average annual out-of-pocket spending for the cancer drug Revlimid was $6,200 $5,700 for the cancer drug Imbruvica; and $4,100 for the MS drug Avonex.” – Kaiser Family Foundation, 1/24/23 

Seniors without subsidies will have to continue paying those higher prices until 2025, when the $2,000 out-of-pocket cap takes effect. 

The Inflation Reduction Act was an ambitious, wide-ranging piece of legislation that included not only prescription drug pricing reform, but climate change mitigation and measures to make the U.S. more economically competitive in the 21st century. 

Not all Americans, let alone, seniors are aware of the historic drug pricing reforms in the Inflation Reduction Act. The Biden administration has been working to enhance the public’s understanding of the law’s positive impact on their pocketbooks and overall health.  CMS posts updates on its activities here. And HHS’ Office of the Assistant Secretary for Planning & Evaluation (ASPE) has a great informational resource on prescription drug price reform, as well. 

Meanwhile, the National Committee to Preserve Social Security and Medicare, which tirelessly advocated for the prescription drug reforms in the IRA, will continue to keep the pressure on Congress to lower prices for seniors and all Americans. 

“We want the number and types of drugs subject to negotiation to be broadened. Eventually we would like to see all drugs subject to Medicare price negotiation,” said NCPSSM legislative director, Dan Adcock. “The door has been opened. Now it’s our job to keep pushing it ever wider so that older Americans can afford the drugs they need to save their lives — and have a better quality of life.”