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Cutting Rx Costs for Seniors

One of the most significant health provisions of the IRA authorizes the Secretary of Health and Human Services (HHS) to negotiate drug prices with manufacturers, which will bring down costs for people covered by Medicare Part D and eventually Part B.

 In Historic Move, the IRA Allows Medicare to Negotiate Down Prices for Seniors

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The Inflation Reduction Act of 2022 has already made a tremendous impact on Colorado’s Medicare recipients, lowering the costs of health care for thousands of seniors and people with disabilities throughout our state. 

 

One of the most significant health provisions of the Act authorizes the Secretary of Health and Human Services (HHS) to negotiate drug prices with manufacturers, which, beginning in 2026, will bring down costs for people covered by Medicare Part D (a standalone prescription drug plan), and in 2028 for those covered under Medicare Part B (medical insurance through Medicare).

 

This August, HHS announced significant cost reductions for the first ten drugs selected for Medicare’s pricing negotiation. These include:

 

  • Eliquis, a drug used by nearly four million Medicare enrollees to prevent and treat blood clots. A 30-day supply that cost $521 in 2023 will go down to $231 in 2026, a 56% price reduction.

 

  • Jardiance, a treatment for diabetes, heart failure, and kidney disease used by over 1,883,000 Medicare enrollees. The cost of a 30-day supply will be reduced by 66%, from $573 in 2023 to $197 in 2026.

 

  • Xarelto, another drug to treat blood clots, particularly for patients with coronary or peripheral artery disease. Xarelto is currently used by 1,324,000 Medicare enrollees, and a 30-day supply will drop from the 2023 cost of $517 in 2023 to just $197 in 2026, representing a 62% reduction.

 

  • Januvia, a Diabetes drug used by 843,000 Medicare enrollees. Costs of a 30-day supply will be reduced from $527 in 2023 to just $113 in 2026–a 79% price reduction.

 

  • Farxiga, a treatment for diabetes, heart failure, and kidney disease used by nearly one million Medicare enrollees. The price of a 30-day supply will go down 68%, from $556 in 2023 to $178.50 in 2026.

 

  • Entresto, a drug commonly used by 664,000 Medicare enrolees to treat heart failure. Costs will be reduced from $628 for a 30-day supply to $295, representing a savings of 53%.

 

  • Enbrel, a treatment for Rheumatoid arthritis, Psoriasis, and Psoriatic arthritis used by approximately 48,000 Medicare enrollees. The price of a 30-day supply will be reduced by 67%, from $7,106 in 2023 to $2,355 in 2026.

 

  • Imbruvica, an expensive blood cancer drug used by 17,000 Medicare enrollees. Costs of a 30-day supply will be reduced from $14,934 in 2023 to $9,319 in 2026, representing a 38% savings.

 

  • Stelara, a drug used to treat Psoriasis, Psoriatic arthritis, Crohn’s disease, and Ulcerative colitis, and is currently used by 23,000 Medicare enrollees. Thirty-day costs will drop 66%, from $13,836 in 2023 to $4,695 in 2025.

 

  • Diabetes drugs Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog, FlexPen, and NovoLog PenFill, collectively used by 785,000 Medicare enrollees, will all be reduced by 76% from $495 for a 30-day supply in 2023 to just $119 in 2026.

 

With these newly negotiated prices, HHS estimates that US taxpayers will save up to $6 billion on prescription drug costs in 2026 alone, and those enrolled in Medicare are expected to save $1.5 billion in out-of-pocket costs. 

 

Here in Colorado, the effects will be profound, as more than 25,000 Medicare enrollees in the Centennial State rely on Jardiance, Januvia, or Farxiga to treat Type-2 Diabetes, while over 63,000 Coloradans use Medicare to access Eliquis or Xarelto for blood clots, according to HHS data.

 

This first round of negotiated prices is just the beginning. HHS plans to expand the list of drugs subject to price negotiations over time, adding fifteen additional Medicare Part B drugs for 2027, another fifteen drugs covered under either Medicare Part D or Part B for 2028, and another round of twenty drugs covered under Part D or Part B for 2029 and beyond. Cumulatively, this will continue to expand cost savings for taxpayers and Medicare beneficiaries alike. 

 

Bringing the Benefits to Private Insurance Plans 

While the current laws only affect Medicare enrollees, some members of Congress have introduced new legislation to expand these benefits to private health insurance plans as well. The Lowering Drug Costs for American Families Act (H.R. 4895) would build on the drug pricing provisions from the Inflation Reduction Act by:

 

  • Expanding price negotiations to Americans who have private health coverage, including those who receive health coverage from their employer and those who purchase plans independently from the Health Insurance Marketplace.

 

  • Extending the rebates from the Inflation Reduction Act to private health plans to prevent drug companies from raising prices faster than inflation, and

 

  • Increasing the annual number of prescription drugs selected for negotiation from 20 to 50 to speed up savings for American families.

 

The Lowering Drug Costs for American Families Act currently has 73 sponsors in the House of Representatives, including Rep. Diana DeGette from Colorado's 1st District and Rep. Yadira Caraveo from the newly-created 8th District.

 

Additional Impacts Of The Inflation Reduction Act of 2022

The original Inflation Reduction Act 2022 Act (P.L. 117-169) was one of the most significant achievements of the 117th Congress. The centerpiece of its healthcare provisions was a series of provisions aimed at lowering prescription drug prices. 

 

In addition to authorizing HHS to negotiate with drug manufacturers, the original law capped out-of-pocket prescription drug costs for Medicare enrollees at $2,000 annually by 2025, a change that will benefit the 19,000 Colorado Medicare enrollees annually who would have otherwise paid higher prescription costs.

 

It also capped the cost of insulin at $35 per month for Medicare beneficiaries who rely on this life-saving diabetes treatment. This provision alone is estimated to save the average enrollee $515 each year, and is currently used by over 16,000 Medicare enrollees in Colorado. All told, the law is estimated to save over $48 million across 177,000 Medicare Part D enrollees in Colorado.

 

Lowering Insurance Premiums and Expanding Coverage

Beyond prescription drug costs, the Inflation Reduction Act includes provisions aimed at reducing health insurance premiums and expanding coverage for Coloradans.

 

The Act extended the health insurance premium tax credits introduced in the American Rescue Plan Act (ARPA) through 2025. These subsidies have already lowered costs for 155,000 Connect for Health Colorado enrollees and reduced their average out-of-pocket costs by $900 per year. In April 2024, Connect for Health Colorado’s Chief Executive Officer, Kevin Patterson, reported that “3 out of 5 customers could find a plan for $10 per month or less after Advance Premium Tax Credits were applied.” 

 

Without the continued subsidies, a 60-year-old Coloradan who earns $60,000 a year and does not receive health insurance through their workplace would pay up to $9,000 annually on a benchmark health care plan, compared to approximately $5,100 under the Act. 

 

These savings are expanding access to health insurance coverage as more families are able to afford a plan. HHS estimated in 2022 that roughly 42,000 additional Coloradans would be able to purchase an insurance plan under the Inflation Reduction Act, contributing to the ongoing decrease in the state’s uninsured rate. The expansion primarily affects low- and middle-income individuals who previously fell outside the eligibility window or were not provided sufficient financial assistance. 

 

Overall, the Inflation Reduction Act of 2022 laid an important foundation making prescription drugs and health plan premiums more affordable for Colorado families. With the announcement of the first ten drugs selected for price negotiations this August, tens of thousands of Coloradans will begin to feel the effects of the Act in their pocketbooks starting in 2026. And if the Lowering Drug Costs for American Families Act is enacted, hundreds of thousands of families on private insurance plans in our state will see their monthly health care costs reduced significantly.

 

For more information on the Inflation Reduction Act and to see how provisions may affect you, visit LowerDrugCosts.gov.

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