The Impact of Prescription Drug Negotiations on Medicare Beneficiaries

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In this article we will know the impact of prescription Drug negotiations on medicare beneficiaries. The Inflation Reduction Act (IRA) of 2022 is legislation that will have a substantial influence on Americans in a variety of ways. While the measure intends to decrease the impact of inflation and solve energy challenges, it also includes provisions to reduce prescription drug costs, particularly for Medicare recipients.

Among the IRA’s significant measures influencing medication costs, the government will be able to negotiate the price of certain high-cost prescription pharmaceuticals, making them more accessible to millions of Medicare enrollees.

What Is the Inflation Reduction Act (IRA) of 2022?

On August 16, 2022, President Biden gave his approval to a piece of legislation that would later be known as the Inflation Reduction Act (IRA) of 2022. This version of the Build Back Better Act is a watered-down version of that bill. Although there were significant cuts made to the Build Back Better Act, many of the proposed issues were addressed, including investments in clean energy, the elimination of tax loopholes, a reduction in the deficit, and a reduction in the cost of healthcare, including the cost of prescription drugs.

How exactly does the IRA work to lower the costs of prescription drugs?

Only Medicare Part D and some Medicare Advantage plans offer coverage for medications that require a doctor’s prescription. The Medicare Prescription Drug Improvement and Modernization Act of 2003 was the legislation that initially made Medicare Part D available to beneficiaries (MMA).

By providing coverage for various prescriptions, the programs aimed to accomplish their goal of reducing the overall cost of medication. The initial version of the bill, on the other hand, contained a provision that expressly forbade the federal government from engaging in pricing negotiations with pharmaceutical corporations.

That will change as a result of the Inflation Reduction Act. Now, the Secretary of the United States Department of Health and Human Services (HHS) will be given the ability and the responsibility to negotiate lower pricing for a certain range of pharmaceuticals. The prices of ten medications covered by Medicare Part D will be subject to price negotiations beginning in the year 2026. In the year 2027, further renegotiation of 15 will take place. In the year 2028, they will select 15 medications for both Part B and Part D, and then in the year 2029, they will select another 20.

The high-priced medications that are now unavailable in generic or biosimilar forms will be the ones that are open for price negotiation. In addition, it has been at least nine years since the United States Food and Medicine Administration (FDA) approved the small-molecule drug, and it has been at least 13 years since the FDA approved the biologic drug. The United States Secretary of Health and Human Services will base his decisions on a list of the top 50 most expensive medications that also fulfill all of the criteria. Cancer, rheumatoid arthritis, and diabetes are the conditions that are typically treated with these pharmaceuticals.

The price that was negotiated will be submitted to a particular algorithm that will establish the highest possible price that is reasonable (MFP). It is anticipated that the prices of most drugs will decline by between 25 and 65 percent.

According to estimates provided by the White House, price reductions for prescription medications might benefit between 5 and 7 million additional people if negotiations were conducted with pharmaceutical corporations.

Additional Methods for Cutting the Cost of Prescriptions

In addition to the right to negotiate pricing, the IRA mandates that pharmaceutical companies must pay Medicare rebates whenever they raise prices at a rate that is higher than the rate of inflation. Another component will limit the patient’s responsibility for out-of-pocket costs for Medicare Part D to $2,000 beginning in 2025. Beginning in 2023, the maximum amount that a patient will have to pay out of pocket each month for insulin under Medicare Part D and Part B will be capped at $35 when the insulin is given by means of durable medical equipment.

Is it necessary for you to enroll in Medicare Part D?

You are not obligated to have Medicare Part D; however, you may choose to do so. Medicare Part D is a supplementary insurance coverage that only covers the cost of prescription drugs. There is a possibility that Medicare Part B will pay for certain prescriptions; however, in most cases, these are pharmaceuticals that must be administered with the assistance of a piece of durable medical equipment such as a nebulizer or an infusion pump.

Medicare Part D covers the vast majority of other types of drugs.

When will there be a decrease in the cost of prescription drugs?

In 2023, the provisions of the Inflation Reduction Act (IRA) that cut the cost of prescription medicine charges go into effect. One of these provisions is a cap on the costs of insulin. Beginning in 2023, consumers will be eligible for rebates on expenditures that are higher than inflation. Not all of the drug price negotiations for more expensive medications won’t take effect until 2026.

How will Medicare decide which medications to negotiate?

Specific criteria will be established for negotiating medications. They must not have a generic or biosimilar product and must have been approved by the Food and Drug Administration (FDA) for at least nine and thirteen years, respectively. The Secretary of Health and Human Services of the United States will select one of the 50 most costly pharmaceuticals that fit this condition.

The Inflation Reduction Act (IRA) has the potential to drastically reduce medicine prices for those those who have the greatest need for it; yet, such individuals will not immediately experience any relief. The first round of pricing negotiations won’t take place until 2026, and they’ll only cover the priciest pharmaceuticals available without taking into account any generics or biosimilars. In the meanwhile, a cap on insulin expenses starts in 2023.


  • Medicare is given the opportunity to engage in price negotiations with pharmaceutical companies thanks to the Inflation Reduction Act (IRA) of 2022.
  • Beginning in 2026, Medicare will begin implementing a phased plan to negotiate the prices of 10 to 20 high-cost medications each year.
  • The cost of medications will reach a maximum that is reasonable. Those individuals who are qualified to receive the discounted costs are the only ones who use Medicare Part D.

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