Medicare drug negotiations a good start on bringing down health care costs

An important Biden administration effort to control the soaring cost of prescription drugs made headlines this week - but drug costs are just one part of a growing struggle faced by seniors in meeting their healthcare costs.

Medicare officials unveiled the first list of drugs that will be subject to price negotiations with pharmaceutical companies under the Inflation Reduction Act (IRA) signed into law last year. The law empowers Medicare to negotiate with drugmakers on some of the most expensive drugs on the market, and the initial list targets medications used to treat diabetes, cancer and heart disease. Any changes in costs resulting from the negotiations will not surface until 2026, but seniors who face high drug costs will see more concrete impacts of the IRA sooner than that.

In 2024, Medicare’s current requirement that enrollees pay a 5% coinsurance above the Part D “catastrophic threshold” will be eliminated. And in 2025, a $2,000 annual cap on out-of-pocket costs for drugs under Medicare Part D takes effect. (A provision that caps patient costs for insulin at $35 per month became effective this year.)

But drug costs are just one aspect of the healthcare cost problems confronting seniors. Inadequate protection from out-of-pocket costs across the Medicare program also poses a threat. In particular, Medicare’s complicated coverage options make the system difficult to navigate, especially for low-income seniors who are eligible for both Medicare and Medicaid and may receive extra assistance from special government programs.

Learn more in my latest Reuters column.

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