How Medicare Prescription Drug Coverage Will Change Under US Senate Democrats Bill

WASHINGTON — A major spending bill from US Senate Democrats would allow Medicare for the first time in its history to begin negotiating prices for some expensive prescription drugs — a proposal that has been around for years but never near the finish line.

Under the legislation, Medicare will begin negotiating prices for some drugs in Part D, the program’s prescription drug plan, starting four years from now.

Moreover, out-of-pocket drug costs for older adults will be capped at $2,000 per year, starting in 2025, which will help pay for expensive drugs such as those used to treat cancer. Beneficiaries will get all of their covered vaccines for free, including those for shingles.

“We will finally enable Medicare to negotiate the price of prescription drug costs,” Senate Majority Leader Chuck Schumer, a Democrat from New York, said Saturday. “After years of trying, we are finally going to put an end to out-of-pocket expenses and make vaccines free for our seniors. After years of trying.”

drug hypertrophy

But Democrats’ disappointment came on Saturday when the lawmaker passed a resolution against part of the measure aimed at combating drug inflation. It could have forced drug companies to pay rebates if prescription drug prices in private insurance plans rose faster than inflation.

Curbing inflation will still apply to drugs in Medicare, and that’s important. A Kaiser Family Foundation study said price increases outpaced inflation for half of all Medicare-covered drugs in 2020.

Medicare’s prescription drug reforms are included in a piece of budget legislation known as the Reconciliation, the main advantage of which is attractive to Democrats is that the end product cannot be disrupted by Republicans under US Senate rules.

Initially, the overall prescription drug appropriation was recorded by the nonpartisan Congressional Budget Office as reducing the deficit by $288 billion over 10 years, though a new result was expected that would reflect last-minute changes to the bill.

The Senate had begun debating the measure on Saturday, with a final vote sometime over the weekend or Monday after a series of votes on the amendments. Schumer said he believes the legislation will have the support of all 50 Democrats, after a tax deal struck with Arizona Senator Kirsten Sinema, and is due to be adopted by the House on Friday.

Medicare is the federal health insurance program for Americans 65 and older, as well as some younger people with disabilities. About 64 million people were enrolled in Medicare as of the most recent year of coverage, and nearly 49 million are on a drug plan of some kind.

general support

While drug companies have opposed Medicare price negotiation, saying it would harm research and development for new drugs and innovation, opinion polls have found strong public support.

The nonpartisan Kaiser Family Foundation conducts regular tracking polls on health issues and found in October that 83% of those surveyed supported negotiations, even after being told of the arguments on both sides.

The same survey found that 27% of those over 65 who take four or more medications said they had problems getting their medication.

Here’s what the Democrats’ proposal would do with prescription drug costs, based on analysis by the Kaiser Family Foundation, Senate Democrats’ summary and legislative text:

  • Beginning in 2026, prices for 10 expensive Medicare Part D prescription drugs will be directly negotiated by the federal government. The number of drugs negotiated will increase to 15 in 2027. Then in 2028, it will cover 15 drugs in both Part D and Part B – those in Part B are usually given by doctors or in hospital outpatients. In 2029 and beyond, it will include 20 Part D and Part B drugs.
  • Eligible drugs may include those that do not contain generics or so-called biosimilar equivalents – versions of more complex drugs. Depending on its type, it must be nine years or more since it was approved by the Food and Drug Administration, which means that new drugs will not be included.
  • Pharmaceutical companies that do not comply with the negotiation will face heavy taxes and potential civil financial penalties.
  • Any Secretary of Health and Human Services would have to negotiate the maximum number of drugs allowed in a given year, which Democrats say would prevent a future Republican presidential administration from refusing to negotiate.
  • Drug manufacturers will have to pay rebates to the Medicare Trust under some circumstances, starting in 2023. They will have to pay if their drug prices increase faster than the rate of inflation, except for drugs with an average annual cost of less than $100. Penalties will be imposed on those who do not pay the rebates. The inflation control will only apply to Medicare and not to private drug plans.
  • Personal drug spending will be capped at $2,000 per year, starting in 2025, and seniors can spread out drug costs throughout the year. In 2024, a 5% co-insurance requirement above the “catastrophic” Medicare Part D limit, which was $7,050 in personal spending in 2022, will be eliminated.
  • The Low-Income Support Program that provides additional help paying for Medicare for Medicare recipients in extreme poverty will be expanded starting in 2024. Seniors now qualify for full benefits in the program if they have an income of up to 135% of the poverty level. feds, or about $9,900 a year for an individual and $15,600 for a couple. The Senate plan would provide full benefits to people up to 150% of the federal poverty level, or $15,510 for an individual and $30,950 for a couple.
  • There will be no charges for vaccines covered by the Part D program, starting in 2023. This will include vaccines recommended by the Advisory Committee on Immunization Practices.
  • Growth in Part D premiums will be set at 6 percent per year from 2024 to 2029.
  • The Trump administration’s drug rebate rule that was supposed to go into effect in 2027 will be abolished.

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