ICYMI: Wall Street Journal Highlights How Kaine-Passed Inflation Reduction Act is Lowering Prescription Drug Costs for Seniors
WASHINGTON, D.C. – Last week, the Wall Street Journal (WSJ) published an article highlighting how the Inflation Reduction Act (IRA), which Senator Kaine helped pass by one vote, is lowering prescription drug costs for millions of seniors with Medicare coverage. Starting this year, seniors on Medicare Part D will see their out-of-pocket costs capped for the first time, saving patients thousands on prescription medications. In 2025, the cap will be lowered to $2,000 per year.
Some estimates have shown that Virginia seniors on Medicare will save an average of $440.62 on out-of-pocket costs on prescription drugs thanks to this cap. Watch here to hear what this cap will mean for seniors like Mr. Irv Varkonyi from Fairfax.
“Changes brought about by the 2022 Inflation Reduction Act mean that people on Part D plans now pay no more than roughly $3,300 on drugs annually—a number that could shift a bit based on whether they take brand or generic medications. In 2025, that cap will change again to a flat $2,000,” the WSJ explains.
“This year’s changes are expected to offer savings to roughly 1.5 million people—in some cases hundreds or thousands of dollars,” WSJ continues. “But by doing away with the 5% coinsurance that patients had to pay after reaching the ‘catastrophic’ spending threshold, the law [Inflation Reduction Act] forces insurers and drug makers to pick up a larger part of the tab.”
Kaine, a member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, has long fought to lower prescription drug costs for Virginians. In addition to the cap on out-of-pocket costs for seniors on Medicare Part D, IRA provisions to lower health costs for low-income Americans and lower premiums for more than 500,000 Virginians went into effect on January 1, 2024. Kaine led a successful bipartisan push urging the Biden Administration to lower out-of-pocket costs for prescription drugs by enforcing a rule limiting the use of harmful copay accumulators. He also introduced bipartisan legislation to protect patients from harmful insurance and Pharmacy Benefit Manager (PBM) practices and lower costs by prohibiting PBMs from making more money on high-cost drugs than they do from lower-cost drugs.
The full WSJ piece is available below:
Medicare Patients on Pricey Drugs Are Saving Big This Year
Liz Essley Whyte, The Wall Street Journal
January 15, 2024
Medicare patients lining up to fill pricey prescriptions at the pharmacy counter this year will realize some good news: For the first time, there is a ceiling on how much they will pay in 2024 for their Part D drugs.
Changes brought about by the 2022 Inflation Reduction Act mean that people on Part D plans now pay no more than roughly $3,300 on drugs annually—a number that could shift a bit based on whether they take brand or generic medications. In 2025, that cap will change again to a flat $2,000.
“It will let me take a deep breath,” said Judy Aiken, a 69-year-old retired nurse in Portland, Maine, who last year paid more than $9,000 out of pocket for a drug to treat her psoriatic arthritis, Amgen’s Enbrel. “Frankly, I was delighted.”
Aiken, who relies on Social Security and a pension, said the roughly $6,000 she is likely to save on Enbrel this year will help her pay off bills, turn less to credit cards and maybe even order a pizza from a restaurant instead of making one at home.
Here’s how it works: People who buy drugs through Medicare Part D, the government-funded insurance program that covers most prescription drugs, pay thousands of dollars for their drugs until they reach the so-called catastrophic zone of spending. After that, they had to continue paying 5% of their drugs’ cost for the rest of the year, sometimes adding up to thousands more. This year, that 5% coinsurance was eliminated. Once Medicare patients spend roughly $3,300—the “catastrophic zone” threshold for 2024—they won’t have to pay any more out of pocket for Part D drugs.
For example, consider a hypothetical 69-year-old man who had a plan with a $505 deductible. If he visited the pharmacy last year to fill his first prescription for a $200,000-per-year blood-cancer drug, costing roughly $16,600 a month, he paid his full deductible, plus 25% coinsurance until he hit the $3,100 catastrophic threshold for 2023, plus 5% coinsurance after that—in total around $3,800. On his next refill, since he remained in the catastrophic zone, he paid the 5% coinsurance, roughly $830. He continued paying roughly $830 every time he filled his prescription, in total spending more than $12,000 out of pocket for the year.
This year, the new cap on drug costs will mean the same man taking the same drug will save a few hundred dollars the first time he fills his prescription, topping out around $3,300, and subsequent refills will cost him $0. He will be done paying for that drug, or any other drug covered by his Part D plan, for the rest of the year.
In 2025, his first trip to the pharmacy will cost him $2,000, and then he’ll pay nothing after that. Or, if he wants to participate in a “cost-smoothing” program, he can spread out that $2,000 over the course of the year.
This year’s changes are expected to offer savings to roughly 1.5 million people—in some cases hundreds or thousands of dollars.
“It is a remarkable savings,” said David Mitchell, president of the nonprofit advocacy group Patients for Affordable Drugs and a Medicare patient himself who spent more than $16,000 out of pocket on a Part D cancer drug last year. “Nobody should have to pay that much money for their drugs.”
The inflation legislation is better known for allowing Medicare officials to negotiate the price of drugs. But by doing away with the 5% coinsurance that patients had to pay after reaching the “catastrophic” spending threshold, the law forces insurers and drugmakers to pick up a larger part of the tab.
The change amounts to a cap on what Medicare patients will pay for their Part D drugs in 2024. Part D covers most outpatient prescription drugs, though some medications, such as physician-administered infusions, are covered under Part B.
“This is not a population that really has the ability to absorb these high out-of-pocket costs year after year,” said Leigh Purvis, Prescription Drug Policy Principal for AARP, the Washington-based advocacy organization for older adults. “It is an important protection for people who will have those costs in the future.”
The downside of the cap for Medicare patients may come in the form of higher premiums or thornier Part D paperwork. Premiums for stand-alone Part D plans were up an average of 20% for 2023, said Juliette Cubanski, deputy director of the program on Medicare policy at KFF, a nonprofit health-policy research organization.
In addition, because Part D plans are picking up more of the drug tab, they may be more motivated to use techniques meant to push patients to cheaper alternative drugs, such as requiring patients to get insurers’ signoff before filling their prescriptions, said Cubanski. They are also likely to alter their lists of drugs that they cover, said Jennifer Chumbley Hogue, a Texas broker who owns KG Health Insurance.
“In 2025, it is going to be more important than ever that our Medicare recipients check their plans and their drugs,” she said.
Though Medicare open enrollment doesn’t start until the fall, people hoping to get an idea of what their drug costs will be can go to www.medicare.gov/plan-compare and input their prescriptions to see their costs under different Part D plans.
The changes represent a major makeover to the Part D prescription-drug benefit, now nearly two decades old. Its previous face-lift, under the 2010 Affordable Care Act, gradually closed the so-called doughnut hole that saw patients having to pay the full cost of their medications until they reached a certain threshold.
Cancer drugs in pill form are common wallet pain points for people on Part D plans. A June 2022 New England Journal of Medicine article found that patients on Bristol-Myers Squibb’s Pomalyst, a blood-cancer drug, could expect to spend more than $14,000 out of pocket for the medication in a year. Patients taking Pfizer’s Ibrance, a breast-cancer drug, could expect to pay more than $10,000. The paper pointed out that a single breast-cancer patient on Medicare and making the median income for her demographic would end up paying nearly half her income on Ibrance alone.
A 2023 report from Patients for Affordable Drugs found that patients who get a brand-name cancer drug through a Part D plan—more than 60,000 people—will save an average of more than $7,500 a year in 2025 thanks to the out-of-pocket cap.
Mitchell of the Patients for Affordable Drugs is set to save about $13,000 on his most expensive cancer drug, which he takes with three others that together, by list price, total more than $1 million annually.
“A million dollars of drugs are literally keeping me alive and I’m grateful to have them, but they are wildly overpriced,” he said.
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