WASHINGTON, Medicare beneficiaries who use expensive medications could save thousands of dollars a calendar year under the Democrats' sweeping Social Agenda Bill. But these dividends are not going to come quickly. They will build slowly over the next decade.
The bill's Medicare prescription drug deal was unveiled late last week. It barely survived a lobbying frenzy by the pharmaceutical industry. Experts have said that the plan would offer private insurance customers some protection against the rising cost of medicines.
Leigh Purvis (Director of Health Care Cost Research at AARP's Public Policy Institute), stated that "the gist of this is that it is going to create substantial savings für Seniors und Steuerzahler." "This will reduce the cost of costly and commonly-used prescription drugs and that has an effect for everyone," said Leigh Purvis, director of health care costs research at AARP's Public Policy Institute. The advocacy arm of the group played a major role in lobbying for restraining drug price increases.
The legislation would save money for patients suffering from serious chronic diseases such as multiple sclerosis, cancer, and rheumatoidarthy.
It would take approximately a year for the first tangible benefits to appear. The bill would prevent annual price increases for existing drugs and set cost limits to ensure insulin affordability. It will be effective in 2023. In 2024, a major development would occur: The first ever cap on out-of pocket costs for almost 50 million seniors in Medicare Part D's pharmacy drug program.
The legislation's health policy core would be live one year later. The first results of Medicare's negotiations for drug companies would be available to seniors. They will not allow for more than 10 drugs, but there is no limit on the number of insulin prices that can be negotiated.
Democratic campaign strategists may not get the political boost they were hoping for for next year's midterm election. The terms and conditions of Medicare prescription drug plans in 2022 have been established. Any changes made immediately would have led to disruptions.
Tricia Neuman, a Medicare expert at the Kaiser Family Foundation, said that it takes time to implement these policies. "I don’t believe consumers will see much of an effect before the midterms."
This timeline is based upon interviews with experts from the Kaiser Foundation, AARP Public Policy Institute, Brookings Institution and Patients for Affordable Droids, as well checks with House Ways and Means Committee Democrats.
The bill would penalize drug companies who raise prices for established medicines above inflation in 2023. This is a pattern that has been common over the years. The penalties would also take into consideration prices that they pay to discourage cost shifting to those with private insurance.
Medicare beneficiaries whose cost-sharing is calculated based on a percentage price of a drug would pay less than inflation.
Medicare beneficiaries with diabetes will also be eligible for $35 monthly copays on all insulin products that are covered under their prescription plan. Private insurance customers will be able to pay $35 for the minimum one insulin product and its dosage.
Some patients could save hundreds of thousands by using the $35 insulin copays
CONSUMER COST-SHARING LIMITATION ANNUAL
People on Medicare will be able to set a maximum amount they can pay out of their pockets for medication starting in 2024. This standard feature of private insurance is missing from the program.
Medicare's annual cap would be $2,000 per year. The Kaiser Foundation estimates that more than 1,000,000 seniors have current costs higher than this level. In 2019, the average cost was $3,200.
David Mitchell, the president of Patients for Affordable Drugs, is one of them. Mitchell, who is battling multiple myeloma says that one of his cancer drugs costs him $15,000 per year through Medicare. Mitchell said, "If you are in that group--like me--this is a big deal."
Medicare patients will eventually be able to spread out their out of pocket payments in manageable increments. Mitchell stated that his first payment was almost $3,300.
In the background, Medicare's prescription benefit structure will be overhauled to provide more incentive for drug companies to negotiate with insurers over costly drugs.
MEDICARE PRICE NEGATIONS
The almost 20-year-old law that established Medicare's prescription drug benefit specifically prohibited the program participating in price negotiations. The dam will slowly open, though it will eventually be lifted in 2025.
Although it continues to oppose the legislation, the industry made significant concessions. These included a limit on the drugs that could be negotiated, exemptions for some medications, as well as removing the earlier idea of using lower prices from overseas as Medicare’s yardstick. Companies will be allowed to set the launch price for new medicines.
Medicare will announce the first set drugs at negotiated prices in 2025. This includes 10 medications and not insulin products. The number of medications with negotiated prices will continue to grow, and may reach 100 in just a few years. According to the House Ways and Means Committee, Medicare should be able to negotiate price reductions of 25 to 60%.
Brookings Institution economist Richard Frank says that he believes about half of the 25 most popular Medicare drugs will be eligible for negotiations right now.
Frank stated, "Right there there is going to some impact for people taking those drugs in ways that will be felt." "Probably 150 drugs will be negotiated by the end of ten years." They must be huge sellers and have been on the market for some time.
It's still difficult for Democratic legislators to pass legislation.
While lowering drug prices has broad support, it is unclear if the messaging-muddled Democrats can explain to consumers their complex legislation.
Frederick Isasi (executive director of Families USA), an advocacy group that supports the plan, said, "That is a very crucial question." "The Democrats in Congress must have a very clear, disciplined strategy."