You’ve probably heard that Medicare will begin negotiations with drug manufacturers…woohoo! Well, don’t throw the confetti quite yet. Yes, they will begin negotiations but it’s only 10 meds the first year. According to Drugs.com, there are over 24,000 medications! Doesn’t that feel like they are throwing a lawn chair off the Queen Mary? AND the negotiated prices won’t become effective till the beginning of 2026! What? Why not now? The first 10 medications that will be negotiated, starting in October 2023:
- Eliquis (a blood thinner)
- Jardiance (a diabetes drug)
- Xarelto (a blood thinner)
- Januvia (a diabetes drug)
- Farxiga (a diabetes drug)
- Entresto (a heart failure drug)
- Enbrel (a rheumatoid arthritis drug)
- Imbruvica (a cancer drug)
- Stelara (a psoriasis drug)
- Fiasp (an insulin)
On a similar note. Have you wondered why medications cost so much more in the US vs other countries? In a nutshell (back in the day), prescription drugs weren’t uniformly covered under Medicare. Some plans included drug coverage and some plans, not at all. Under the President George W Bush administration, the ‘Medicare Prescription Drug, Improvement, and Modernization Act of 2003’ was approved and Part D (drugs) of Medicare was put into place which mandated all Medicare beneficiaries acquire a Part D plan or face a penalty later. Part of this Act stated Medicare could NOT negotiate with drug manufacturers but instead, there would be ‘manufacturer discounts’ applied. Now, if you told me that you would buy my gadget as long as there was a ‘manufacturer’s discount’ applied, what would stop me from jacking up the price, applying a discount and basically charging whatever I want? And that’s basically what has happened. There have been a couple of Bandaids over the years like insulin being capped at $35/month but overall, we hear from our clients ALL the time about how they cannot afford many of their daily medications any longer.
Another wild fact is that the VA can negotiate with drug manufacturers. Last time I checked, the VA was part of the government also. So, why can’t Medicare follow the lead of the VA program? And if you have done any research, you may have noticed that other countries (namely Canada and Mexico) sell the generic form of meds a whole lot quicker than the US does. Yet another thing that makes us go…hmmmm.
Circling back to this glimmer of hope. In 2022, the Biden administration passed the Inflation Reduction Act (IRA) which allows Medicare to begin negotiating prices on medications. 10 out of 24,000 doesn’t seem like hitting a home run but they at least got to first base in an effort to reign in the costs for Medicare beneficiaries over the long run. We believe one of the most important parts of the IRA is the $2000/year cap on medication out-of-pocket costs. For some of our clients, they are paying between $3600 – $5000/year so $2000/year cap will help a bunch! But yet again…that doesn’t start till 2025!
Back to the news at hand….in addition to the 10 drugs listed above, Medicare will also negotiate prices on up to 60 additional drugs over the next four years. Will it make a dent in the exorbitant and rising cost for our clients? Only time will tell. Stay tuned!