U.S. Senator Joe Manchin released a press release concerning the U.S. Senate’s passage of the Inflation Reduction Act of 2022. Importantly, the Act addresses rising health care costs. The high cost of healthcare in the United States has been attributed to mostly two factors: 1) high wages for healthcare workers; and 2) the high cost of pharmaceuticals/biologics. The first factor is unlikely to be addressed by the government. The Inflation Reduction Act of 2022 takes on the pricing of pharmaceuticals/biologics. Hopefully, the drug pricing changes will help reduce healthcare costs, but those changes may be offset by rising wages for healthcare workers. Senator Manchin’s office has released a document outlining the Act’s provisions on drug costs, in part:
The IRA lowers healthcare costs for millions of Americans through policies that protect consumers and hold drug companies accountable. Specifically, the IRA will: • Empower Medicare to negotiate prescription drug prices, beginning with ten of the highest-costing drugs in 2023 and expanding to 20 each year by 2029, saving $100 billion. • Cap Medicare beneficiaries’ out-of-pocket costs at $2,000 per year, with the ability to spread the cost over monthly payments, saving more than a million seniors $1,200 per year.• Extend for three years provisions from the American Rescue Plan (ARP) that improved health care affordability for people who buy insurance on the individual marketplaces. • Penalize drug companies for outrageous price hikes. Drug companies – not consumers – will now be on the hook for drug prices that exceed inflation. Drug companies will lose current incentives to keep costs high by secretly negotiating with insurers and pharmacy benefit managers to ramp up profits at the expense of patients. This prohibition will save Medicare $71 billion. • Provide free vaccines for seniors under Medicare, including COVID vaccines, the shingles vaccine, and other necessary vaccines. • Increase help for low-income seniors, giving all qualifying Medicare beneficiaries the full low-income subsidy under Medicare Part D. The average value of this assistance is around $5,000 per person. • Stabilize Part D premiums in Medicare, ensuring seniors and people with disabilities will never see their premiums increase more than 6% from year to year through 2029. (emphasis added).