Medicare beneficiaries in the coming year stand to benefit from potential savings on a range of medications, thanks to a federal law implemented by the Biden administration. Announced on Thursday, the law penalizes pharmaceutical companies if they increase drug prices at a rate exceeding inflation. Medicare, the federal health program for individuals aged 65 and older, released a list of 48 drugs—spanning blood thinners, antibiotics, and clinic-administered cancer medications—falling under “Part B” coverage. The savings, effective from January 1, 2024, are estimated to range from $1 to $2,786 per dose, contingent on an individual’s coverage.
Medicare beneficiaries typically shoulder a 20% coinsurance on doctor-administered medications. The Biden administration asserts that inflation penalties will substantially reduce these out-of-pocket expenses for five specific drugs. Notably, this includes the blood thinner argatroban, the chemotherapy drug bortezomib, and antibiotics cefepime, meropenem, and vancomycin.
President Joe Biden highlighted these efforts to promote drug savings during a visit to the National Institutes of Health in Bethesda, Maryland. The inflation penalties are a component of Biden’s comprehensive 2022 legislation, the Inflation Reduction Act, aimed at compelling pharmaceutical companies to curtail drug prices through various measures.
“It’s about giving folks just a little more breathing room,” stated Biden, emphasizing that Americans have historically paid more for prescription drugs than their counterparts in other advanced nations.
For the first time, the Inflation Reduction Act grants the Centers for Medicare & Medicaid Services (CMS) the authority to negotiate lower drug prices within the Medicare program. While the Biden administration has identified the initial ten drugs related to diabetes, heart disease, and cancer for negotiation, these negotiated prices won’t take effect until 2026. Over the next two years, an additional 30 drugs will be selected for negotiated prices, slated to come into effect in 2027 and 2028.
Biden anticipates that the federal law’s provisions, including price negotiations, will result in $160 billion in savings for the Medicare program over the next decade. Consumers, too, are expected to benefit from lower drug prices, including a $35 per month cap on insulin for Medicare enrollees.
The Inflation Reduction Act also imposes limits on price hikes for more commonly prescribed Part D drugs, typically dispensed at pharmacies or delivered by mail. Starting in 2025, pharmaceutical companies facing Medicare will be billed for price hikes that exceed inflation in 2022, 2023, and 2024.
