Why Drug Costs Could Fall for CA Medicare Beneficiaries


The so-called Inflation Relief Act proposed by Democratic senators would allow Medicare to negotiate prices for expensive prescriptions, which could reduce costs for consumers.

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Hundreds of thousands of Medicare beneficiaries in California could see their prescription drug costs plummet under a big spending bill that Congress is about to consider.

The legislation would cap out-of-pocket drug costs at $2,000 a year, a provision the Kaiser Family Foundation estimates would benefit 114,775 Californians.

The nearly half a million Medicare beneficiaries in the state who also pay part of the cost of vaccines for shingles, pneumonia and other diseases that commonly affect the elderly would end this cost sharing and provide vaccines for free.

“People with high out-of-pocket expenses will see real savings,” said Juliette Cubanski, deputy director of the foundation’s health insurance policy program.

“So many people, especially the elderly, … have multiple medications that they need,” said Sacramento-based consumer advocate Anthony Wright. “Some patients have extreme costs: the diabetic who needs insulin on a regular basis; multiple sclerosis patients, some of their drugs cost literally thousands of dollars.

He added: “The inflated prices of prescription drugs are widely felt by all of us, and they are also acutely felt by those who have very large bills due either to the types of drugs they have to buy or because that they just have a lot of that they buy.

Perhaps the most important aspect of this legislation, known as the Inflation Relief Act, is a provision that would allow the Centers for Medicare & Medicaid Services in the United States to negotiate drug prices for beneficiaries who are enrolled in Medicare prescription drug coverage, known as Medicare Part D.

The health agency has been barred from negotiating with drugmakers over prices since 2003, when Medicare Part D was approved with bipartisan support and signed into law by President George W. Bush, a Republican.

Think tanks and academic researchers have long pointed out that Americans pay far more for prescription drugs than residents of other industrialized nations, and consumer advocates and Democrats have said that giving Medicare bargaining power would help curb the price hikes often imposed by pharmaceutical companies.

“I think people … recognize that the price of prescription drugs is often skewed, that there doesn’t seem to be a lot of reasons why a drug costs hundreds or even thousands of dollars,” said Wright, the executive Director. access to health.

The bill must be approved by the Senate and House, which are expected to debate and vote on the measure this month.

How seniors save

The main provisions of the moment:

Price negotiations. This bill will enable negotiation of prescription drug prices on expensive drugs starting in 2026. The process opens with 10 prescriptions, increasing to 15 in 2027 and 20 drugs in 2029 and beyond.

The State of California was collect information on drug prices and moves towards negotiating drug prices with manufacturers. If Medicare has already negotiated prices for the 10 to 20 most common prescription drugs, Wright said, that could remove work for California negotiators and allow them to jump to the drug at No. 21 and others down the line. the list.

More people eligible for additional assistance. Tens of thousands of Medicare Part D beneficiaries in California are now receiving subsidies to help cover the costs of their prescription drugs. This bill would expand eligibility to just over 24,000 people.

Currently, to receive full grants, recipients must have an income of 135% of federal poverty line. The Inflation Relief Act would raise the level to 150%, likely from 2024.

For an individual, this would drop income levels from $18,346 to $20,385 below current poverty levels. For a family of four, the income level would increase from $37,462 to $41,625.

Vaccines. Eliminates cost-sharing, which means beneficiaries can receive vaccines covered by Part D for free.

Catastrophic drug coverage. If Part D beneficiaries used only brand name drugs, their out-of-pocket drug expenses had to exceed $10,000 for the year before Medicare began covering 95% of the cost. A provision of the new law, effective in 2024, would require Medicare to pay the full cost. More than 110,000 Californians could benefit.

Increase in the cost of bounties. No more than 6% per year between 2024 and 2029.

Curb excessive price increases. Pharmaceutical companies would be prevented from raising prices above the rate of inflation. They would have to pay government rebates, and those rebates would go to help Medicare if prices exceeded the cost of living.

Wright said he thinks this will effectively put an end to steep cost increases for some drugs because drugmakers won’t want to make those payments.

The savings to the government from these provisions are designed to help pay for the expansion of Obamacare subsidies to low- and middle-income people over the next three years, as well as deficit reduction. This financial assistance, part of the coronavirus relief law known as America’s bailout, has allowed many Golden State residents to pay as little as $10 a month for 2022 insurance policies. from Covered California.

About 59,000 Sacramento County residents took advantage of coverage subsidies this year, and if they expire, their average monthly premiums would skyrocket to $633 from $85. Indeed, prices would skyrocket statewide: from $510 to $76 in Fresno County, to $598 from $89 in Stanislaus County, and from $28 to $643 in Merced County.

health insurance policy

Democrats call the bill a historic measure.

“We are now on the cusp of a once-in-a-lifetime generational opportunity,” said Senate Finance Committee Chairman Ron Wyden, D-Oregon. The bill, he said, will prevent consumers from “getting mugged at the pharmacy counter.”

Many Republicans do not see the changes as beneficial.

“It’s not real reform,” said Sen. Roy Blunt, R-Mo. “If you really wanted to do something about drug prices, you would take advantage of what we did with Medicare Part D, which was to create a market.

“Every time they touch it, they try to reform the competitive nature of it,” said Blunt, the top Republican on the Senate Labor Appropriations/Health and Human Services Subcommittee. “It was incredibly successful when it was set up and will continue to be so if you continue to make it a market place rather than a government run regulated health care system.

David Lightman is McClatchy’s chief congressional correspondent. He has been writing, editing, and teaching for nearly 50 years, with stops in Hagerstown, Riverside, California, Annapolis, Baltimore, and since 1981, Washington.

Cathie Anderson covers health care for The Bee. Growing up, her blue-collar parents paid for care out of their own pockets. She joined The Bee in 2002, with roles including business columnist and editor. She previously worked at newspapers such as Dallas Morning News, Detroit News and Austin American-Statesman.

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