Friday, January 27, 2023
Homehealth and sciencePassage of Inflation Reduction Act gives Medicare historic new powers over drug...

Passage of Inflation Reduction Act gives Medicare historic new powers over drug prices

  • Medicare is gaining the power to negotiate prices for certain drugs and punish pharmaceutical companies that don't play by the rules.
  • The legislation represents a historic expansion of Medicare's power that was fiercely opposed by the pharmaceutical industry.
  • But the negotiation powers are limited in scope, and some lawmakers argue that legislation doesn't go far enough.

A pharmacist collects medications for prescriptions at a pharmacy.Simon Dawson | Bloomberg | Getty Images

Medicare is poised to renegotiate the prices of some of its most expensive drugs through a historic expansion of its power, which could reduce costs for many seniors as well as federal spending on its prescription drug plan.

The changes are tucked inside a massive spending-and-tax bill in Congress that includes $433 billion in investments in health-care and clean energy. House Democrats passed the Inflation Reduction Act on Friday in a 220 to 207 vote along party lines, ending a tortured legislative process that took more than a year.

The bill empowers the Health and Human Services Secretary to negotiate prices for certain drugs covered under two different parts of Medicare and punish pharmaceutical companies that don't play by the rules. The legislation also caps out-of-pocket costs at $2,000 starting in 2025 for people who participate in Medicare Part D, the prescription drug plan for seniors.

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