16 Nov Will the Inflation Reduction Act lower my costs for prescription drugs?

Q. My wife and I used to pay a $0 copay for our satin prescriptions, but when we turned 76, we had to pay a copay. Will this new inflation bill help?
— Hoping for savings

A. No one wants to pay a copay for medicines if they don’t have to.

That’s especially true for those who are on a fixed income in these inflationary times.

There’s still a lot to unpack about the Inflation Reduction Act of 2022 and whether it will help your specific situation.

Here are some items to consider about the law, which includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government.

Prices for a small number of single-source brands can be negotiated under Medicare Part D, starting in 2026, and under Part B, starting in 2028, said Evan Drury, a chartered financial consultant with U.S. Financial Services in Fairfield.

Subject to price negotiation will be 10 Part D drugs for 2026, 15 Part D drugs for 2027, 15 Part D and Part B drugs for 2028, 20 Part D and Part B drugs for 2029 and later years, Drury said.

“These drugs will be selected from among the 50 drugs with the highest total Medicare Part D spending and the 50 drugs with the highest total Medicare Part B spending,” he said. “The number of drugs with negotiated prices available will accumulate over time.”

Some drugs will be excluded from negotiations, he said. These include those that have a generic, and those that are less than nine years (for small-molecule drugs) or 13 years (for biological products) from their FDA-approval or licensure date.

Also, so-called “small biotech drugs” will be excluded until 2029. These are defined as those which account for 1% or less of Part D or Part B spending and account for 80% or more of spending under each part on that manufacturer’s drugs, he said.

Additionally, drugs with Medicare spending of less than $200 million in 2021, which will be increased by the CPI-U for subsequent years, will be excluded, as will all plasma-derived products, he said.

Also important to note: The Inflation Reduction Act requires drug manufacturers to pay a rebate to the federal government if prices for single-source drugs and biologicals covered under Medicare Part B and nearly all covered drugs under Part D increase faster than the rate of inflation (CPI-U), Drury said.

But not all drugs will have rebates and it seems to be unclear what drugs will have rebates at this time, he said.

Overall, the legislation appropriates 10-year (2022-2031) funding of $160 million to the Centers for Medicare & Medicaid Services (CMS) for implementing the inflation rebate provisions ($80 million for Part B and $80 million for Part D), he said.

“The Part D inflation rebate provision takes effect in 2022, the starting point for measuring drug price increases, with rebate payments required beginning in 2023. The Part B inflation rebate provision takes effect in 2023,” he said.

Consider consulting a Medicare professional with any questions on this matter.

Email your questions to .

This story was originally published on Nov. 17, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.