Rising Drug Prices Demonstrate Need for Inflation Reduction Act’s Changes
This week marked the one-year anniversary of the signing of the Inflation Reduction Act (IRA), landmark legislation that allows Medicare to negotiate drug prices for the first time and penalize manufacturers who raise prices faster than inflation, among other changes. The Congressional Budget Office estimates $100 billion in savings for drug price negotiation alone. For beneficiaries, two new reports show the urgent need for these improvements.
Starting in 2026, 10 Part D drugs with the highest spending will be available at a price negotiated between Medicare and the manufacturer. In 2027, negotiation will encompass an additional 15 drugs, then, in 2028, Part B drugs will be added to the mix. Starting in 2029, the number of additional drugs negotiated each year will top out at 20. Similarly, the manufacturer penalties for price hikes beyond inflation have not gone fully into effect, though Medicare has already reduced cost-sharing on some drugs to reflect differences between the list price and the price Medicare would have paid if prices had merely kept up with inflation.
A KFF report shows that, despite Part D covering over 3,000 drugs, a very small number of drugs are responsible for a large amount of spending. In 2021, the top 10 drugs (Eliquis, Revlimid, Xarelto, Trulicity, Januvia, Jardiance, Imbruvica, Humira (Cf) Pen, Lantus Solostar, and Ozempic) accounted for $48 billion, 22%, of Part D spending. This is more than double the $22 billion spent on the top 10 drugs in 2018 and far above inflation.
An AARP report also highlights just how quickly drug prices have increased, showing that prices for 25 top Part D drugs have more than tripled since they were introduced and accounted for $80.9 billion in Part D spending in 2021.
These numbers show the importance of bringing down the cost of the most expensive drugs and limiting price increases across the board to ensure that people with Medicare can afford their needed medication. Medicare Rights strongly supports these and other efforts to improve the affordability of health care and the well-being of the people Medicare serves.
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