Last month, the Biden administration and federal health officials announced new, lower prices on 10 high-cost drugs due to the Inflation Reduction Act (IRA) Congress passed in 2022.
That historic announcement on Aug. 15 received nationwide coverage, as we explained last week because the government and Medicare members would benefit when the new lower prices of those 10 drugs go into effect on Jan. 1, 2026. While lower prices are always welcome, the news overshadowed other features of the IRA that health care journalists should cover now. Many other IRA provisions that benefit Medicare recipients begin in January and phase in over subsequent years.
High drugs costs and nonadherence
In addition to cutting $6 billion from what Medicare pays for those 10 drugs, Medicare Part D members will save an estimated $1.5 billion of what they would have paid for those same medications. And, three lesser-known features of the IRA will make it easier for the more than 50 million older adults enrolled in Part D plans to pay for their medications, according to this report from KFF researchers. Part D is Medicare’s outpatient drug benefit program.
This story is significant because a report published today (Sept. 5, 2024) shows that senior citizens face such high drug prices that many fail to take their prescriptions. That report, “Prescription Medication Use, Coverage, and Nonadherence Among Adults Age 65 and Older: United States, 2021–2022,” from the federal CDC, showed that 17.3% of Americans age 65 and over have no prescription drug coverage. And, many of those with such coverage did not get the medications they needed. Others skipped doses, delayed filling prescriptions or took less than prescribed.
The CDC report helps to put the many features of the IRA into context for journalists. Reporters can find sources to comment by interviewing seniors with Part D plans, retail pharmacists who dispense these drugs and any of the thousands of experts who help Medicare members enroll in these plans or change to other plans, as well as health policy experts.
IRA features to cover
There are at least three stories to write about other IRA provisions and how opponents of the law may file more legal challenges to the IRA. The first one is is the $2,000 annual limit on out-of-pocket drug costs for all Medicare members. This feature will become effective on Jan. 1, and will be adjusted annually to account for inflation, the federal Department of Health and Human Services (HHS) explained in this report. “These benefit design changes will save thousands of dollars for people who take high-cost drugs for cancer, rheumatoid arthritis and other serious conditions,” the KFF researchers noted.
Second, is the Medicare Prescription Payment Plan. This little-known plan offers seniors the option to pay out of pocket for prescription drugs in the form of capped monthly payments over time when picking up their first prescription at the pharmacy in January.
This provision and others in the IRA that are separate from the price negotiations will reduce out-of-pocket spending by more than $7 billion annually and help almost 20 million enrollees, or more than a third of Medicare beneficiaries, said Mark Fendrick, M.D., director of the Center for Value-Based Insurance Design at the University of Michigan.
Journalists should note, however, that not all Medicare Part members will know to ask about this provision, and health plans may not inform all members, Fendrick warned.
Third, is the Part D Extra Help or Low-Income Subsidy (LIS) program for Medicare Part D members who are at or below specific annual income limits and who may qualify for a subsidy to help cover the costs of medical care and medications. Even people who don’t qualify for Medicaid may be eligible for Extra Help or the LIS program. These programs became effective in 2024 for people whose annual income is below $22,590 and for married couples with a combined income of $30,660.
The need to inform
Each of these programs is important because not all Medicare members may know about them, Fendrick said. “Hardly anyone knows about the $2,000 out-of-pocket cap,” he added in a telephone interview. “And too many people don’t know about the option for Medicare Part D members to smooth out the $2,000 out-of-pocket cap over the year. That’s really important to lots of people.”
In May, KFF published a poll confirming the importance of writing about these IRA features. These stories are important because many Medicare members are not aware of them. That poll showed that only about half of seniors were aware of the IRA provisions designed to reduce their out-of-pocket drug costs. That poll also revealed that just over half (52%) of older voters were aware of the $35 cap on the out-of-pocket cost of insulin for Medicare members and that just 4 in 10 were aware of the provision that limited out-of-pocket costs for people on Medicare to $2,000.
Easing seniors’ drug-cost burden
In addition to changes going into effect in 2025, the IRA has already started helping seniors. In an article for Health Affairs, Fendrick noted that in January 2024, the IRA started to help people enroll in Part D plans by eliminating the requirement that they pay 5% in coinsurance after they reach the catastrophic threshold when their total prescription drug payments reach $8,000.
Eliminating this 5% coinsurance requirement meant that in 2024, Part D enrollees paid no more than an estimated $3,300 for all brand-name drugs they took, KFF reported in December. That change helped more than 1 million Medicare members save money on drugs, KFF added.
Are legal challenges coming?
Another IRA issue to cover is whether drug companies and their allies will challenge the drug-price negotiation provisions in court. After Congress passed the IRA in 2022, drug companies filed lawsuits, as Sheryl Gay Stolberg and Rebecca Robbin reported for The New York Times.
Some of the lawsuits have failed and some are pending, according to the Health Care Litigation Tracker at the O’Neill Institute at the Georgetown University Law Center. But after the U.S. Supreme Court overturned the Chevron doctrine, IRA’s opponents may have a new avenue to pursue such claims, as Shannon Firth reported for MedPage Today. The ruling came in response to two separate lawsuits: Relentless, Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo, Firth explained.
In the Chevron decision, the court limited the power of federal agencies to interpret the laws they administer and said courts should rely on their interpretations of ambiguous laws, as Amy Howe reported for the SCOTUSblog.
In a phone interview, Anne Montgomery, a senior expert on health care policy at the National Committee to Preserve Social Security and Medicare, said: “I imagine there would be more efforts from various parts of the health care sector to file litigation when they are unhappy for whatever reason with rules or regulations from CMS and HHS.”
Resources
- “US will still pay at least twice as much after negotiating drug prices,” Deena Beasley, Reuters, Sept. 3, 2024
- “Prescription Medication Use, Coverage, and Nonadherence Among Adults Age 65 and Older: United States, 2021–2022,” National Health Statistics Reports, federal Centers for Disease Control and Prevention, Sept. 5, 2024.
- “CMS Should Do More To Fulfill The IRA’s Promise To Lower Drug Costs For Patients,” Health Affairs Forefront, Aug. 12, 2024.
- “HHS names first 10 drugs for price negotiations under the Inflation Reduction Act,” AHCJ’s Covering Health, Aug. 29, 2023
- “ Health Care Impacts Following Chevron Decision,” Brownstein Hyatt Farber Schreck, July 3, 2024
