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If you want to understand why the Biden administration gets so little credit for its accomplishments — and why it might deserve a little more — pay attention to a little-noticed policy announcement from last Friday.
The Notice was a list of 43 prescription drugs covered by Medicare whose prices have risen faster than the rate of inflation. The list included relatively well-known drugs like Humira, which treats various inflammatory conditions, as well as some lesser-known drugs like Leukine, which helps cancer patients undergoing chemotherapy fight off infection.
Until recently, such rate hikes would only have resulted in higher costs for the Medicare program — and for individual seniors who would have to pay out-of-pocket. Or, to put it more bluntly, both American taxpayers and American consumers have been completely at the mercy of drug industry pricing.
But it doesn’t work that way anymore, thanks to the Inflation Reduction Law – You know, the bill that President Joe Biden and the Democratic Congress debated for more than a year before it finally came out put into effect it in August 2022 and almost everyone seems to have forgotten that since then.
A key focus of the IRA is reducing the cost of prescription drugs. One way to do this is to penalize drug companies that increase prices faster than the rate of inflation. The 43 drugs on last week’s list met all of these criteria. Because of this, manufacturers must pay some money back to the federal government to effectively help fund Medicare costs.
The IRA will also have a more direct impact on seniors. For each drug on the list, the federal government will reduce the “co-insurance” owed by individual seniors to pay for the drugs, with savings the government has calculated range from $1 to $449 per dose.
That might not sound like a lot of money to some of you, and in some cases it most certainly isn’t. I can imagine that’s one of the reasons the news doesn’t get more attention. Another reason is that these penalties only apply to a relatively small group of Medicare beneficiaries.
Then there’s the fact that the benefit is so damn hard to explain. You’ll find that it took me several paragraphs to do this and, in full disclosure, I glossed over a fair number of details, such as the fact that the 43 drugs all fall under Part B of Medicare, which covers outpatient care. (These are mainly drugs given by IV or injection, not pills bought at the pharmacy.)
With such benefits, is it any wonder that few people know they exist?
But the impact of inflation penalties and reduced co-insurance will compound over time, covering more medications, including those seniors get at pharmacies. In addition, economists predict that pharmaceutical companies will be less likely to increase their prices faster than inflation in the future to avoid these penalties.
And that’s just one of the provisions of the new law that will reduce the cost of prescription drugs.
There are a cap on insulin prices and the widespread ability to negotiate prices directly with manufacturers, plus one Overall cap on out-of-pocket drug spending. For some seniors, that means “big, tangible savings” of thousands of dollars, it says Tricia Neuman, senior vice president of KFF, the nonpartisan health research organization. Neuman added that she was surprised at how much the feature “stayed under the radar.”
And of course, health care regulations are just one example of how the IRA will affect everyday Americans. At the heart of the legislation are provisions to encourage the use of clean energy, particularly through products and resources developed right here in the United States
My HuffPost colleague Alexander Kaufman wrote about this back in January in an article focused on building construction in Georgia North America’s largest solar manufacturing facility. I’ve seen it in person, too, from my home in Michigan, where it seems that not a week goes by without news of an auto industry company opening or converting plants produce electric vehicles and their components.
Not everyone is happy with these developments. Every IRA provision has its critics, including conservatives who say regulating prices (of prescription drugs) will hamper investment in research and deny that climate change is even a threat worth addressing (through clean energy projects).
But there is also a palpable ambivalence, even among people who are more sympathetic to the goals of the legislation, which no doubt has something to do with all these reforms habit Do. Climate change will not go away on green investment, and drugs will still be more expensive in the US than in any other country.
There’s a reason for that. Both provisions were subject to compromises made by their proponents to ensure passage in a tightly divided Congress.
But as gradual as they may be, unclear or difficult to explain, such progress in American politics does indeed appear. You will make a noticeable difference for many people. It just depends on who’s paying attention.