Inflation Reduction Act Gets Thumbs Up From Most Healthcare Groups

WASHINGTON — Many healthcare organizations applauded the Senate’s passage of the Inflation Reduction Act with its provisions capping out-of-pocket insulin costs and allowing Medicare to negotiate drug prices, but those with business ties were none too pleased.

“David may just triumph over Goliath,” Frederick Isasi, JD, MPH, executive director of the healthcare consumer group Families USA, said in a statement after the Senate passed the Inflation Reduction Act on a 51-50 party line vote — with Vice President Harris breaking the 50-50 tie — in a marathon voting session over the weekend. “Stopping Big Pharma’s price gouging and lowering the cost of prescription drugs is a huge victory for families across this nation. Senators passed a strong and wildly popular bill that will take on the drug industry’s pricing abuses and curb health insurance premium spikes at a time when working families need it the most.”

The $430-billion measure would provide $64 billion to extend for an additional 3 years of premium subsidies for lower-income Americans who purchase health insurance on the Affordable Care Act’s (ACA) health insurance exchanges. It also includes a number of provisions affecting Medicare beneficiaries:

• Capping Medicare beneficiaries’ out-of-pocket drug costs at $2,000 per year
• Expanding premium and co-pay assistance for low-income seniors in the Medicare Part D drug program
• Allowing Medicare to negotiate for the price of certain prescription drugs beginning in 2026
• Making all vaccines free for Medicare beneficiaries

Senate Democrats also included a provision in the bill to cap insulin costs for Medicare beneficiaries at $35 per month. They had included a similar provision for private insurance enrollees in the bill, but that provision was disallowed by the Senate parliamentarian and further blocked by Senate Republicans. The legislation will be taken up on Friday by the House, where it is expected to pass, and then head to President Biden’s desk for his signature.

The American College of Physicians (ACP) applauded the bill’s climate change-related provisions, which include tax credits for clean sources of electricity and a program to reduce methane emissions from natural gas production. “The legislation will help to reduce carbon pollution and advance clean energy solutions,” ACP president Ryan Mire, MD, said in a statement. “We are also encouraged that the legislation will cap insulin costs for Medicare beneficiaries, allowing our senior patients to more easily afford this life-saving medication.”

The Medicare drug price provisions kick in gradually, Larry Levitt of the Kaiser Family Foundation noted in a tweet. They start in 2023 with drugmakers being required to pay rebates if their prices rise faster than inflation, and in 2024 it eliminates the 5% copay Medicare beneficiaries currently have in the”catastrophic coverage” phase of their Part D plan. The $2,000 out-of-pocket cap kicks in during 2025, and then in 2026 the price negotiation begins, first for 10 drugs and gradually increasing to 20 drugs. Levitt added that some things on the Democrats’ “wish list” failed to make it into the bill, including the permanent extension of CHIP, a Medicare hearing and dental benefit, and paid family and medical leave.

The Endocrine Society focused on the insulin provisions. “We are pleased the Inflation Reduction Act includes provisions to lower the price of insulin and a cap on out-of-pocket insulin costs for people on Medicare,” the society said in a statement. “Unfortunately, the Senate missed an important opportunity to also help children and adults with type 1 diabetes. Forty-three Republicans voted against including a provision that would have capped out-of-pocket costs for individuals with private insurance that the society supported.”

Sen. Ron Wyden (D-Ore.) expressed similar sentiments. “”Republicans have just gone on the record in favor of expensive insulin,” Wyden said in an email to reporters. “After years of tough talk about taking on insulin makers, Republicans have once against wilted in the face of heat from Big Pharma.”

Not everyone was happy with what did pass. “The Senate passed short-sighted legislation that will have a detrimental impact on the cost of healthcare for all Americans – both on Medicare and those who have private or employer-sponsored coverage,” the Council for Affordable Health Coverage, a group backed by drugmakers and other business interests who favor free-market solutions, said in a statement. “The bill kills competition and innovation, leading to higher costs and a decline in new lifesaving drugs while doing nothing to lower inflation.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) called the measure a “tragic loss” for patients. “This drug pricing plan is based on a litany of false promises,” PhRMA president and CEO Stephen Ubl said in a statement. “They say they’re fighting inflation, but the Biden administration’s own data show that prescription medicines are not fueling inflation.”

“They say this is ‘negotiation,’ but the bill gives the government unchecked authority to set the price of medicines,” Ubl continued. “And they say the bill won’t harm innovation, but various experts, biotech investors and patient advocates agree that this bill will lead to fewer new cures and treatments for patients battling cancer, Alzheimer’s and other diseases.”

The Employers Prescription for Affordable Drugs coalition, an employer group concerned with drug costs, said in a statement that just having the cap for Medicare and not for private insurance “would actually increase prices for those with commercial coverage, above the unsustainably high prices they’re already paying, as costs are shifted from Medicare to employer plans.” The group cited articles in Health Affairs and JAMA Health Forum as evidence for its position.

The group urged Congress to “reevaluate these provisions, and avoid adopting measures that fail to protect working families. If prices are reduced in Medicare with no corresponding protections for commercial markets, working families may well foot the bill as costs will rise to recoup losses from Medicare drug sales.”