Subscribe (free) to xpostfactoid
When media addresses the prescription drug cost control measures in the Inflation Reduction Act, the provisions empowering Medicare to negotiate the price of select high-value drugs tends to suck up all the attention.
Rightly, perhaps. While the negotiation regime is slow to start (beginning with 10 drugs to be negotiated in 2026), modest in number (rising to 20 drugs negotiated in 2029), and abjuring reference pricing from European countries (instead capping prices at a set discount of average U.S. prices), it establishes a vital principle, and the scope and terms of negotiation may be expanded and strengthened over time.
That said, a lower-profile provision that kicks in quickly (in 2023) is projected (by the Congressional Budget Office) to save/raise roughly as much money as drug negotiation: Inflation caps on the prices of drugs currently on the market. If a drug manufacturer raises the average price charged for a given drug by an amount that exceeds the consumer price index for urban consumers (CPI-U) it must rebate the difference to Medicare. That provision not only starts right away, it also applies to employer-sponsored and individual market health plans as well as Medicare (the rebates accrue from all drugs sold but are paid only to the federal government). CBO projects that the inflation caps will generate $62 billion in savings and $38 billion in revenue over ten years.
