Medicare Drug Price Negotiation: Improved Access and Affordability for Marginalized Populations

The Inflation Reduction Act’s Medicare drug price negotiation provision is set to revolutionize the affordability and accessibility of medications for millions of Americans. This groundbreaking reform is particularly significant for women, Black, Hispanic or Latino, LGBTQI+, and disabled beneficiaries who have historically faced challenges accessing necessary medications due to high costs.

The Inflation Reduction Act: A Game Changer in Drug Pricing

The Inflation Reduction Act introduces historic reforms to address the high costs of prescription drugs. These include provisions to limit out-of-pocket costs for most insulin products to $35 per month as of January 2023, expand the low-income subsidy for Part D coverage to 150 percent of the federal poverty level in 2024, and set a new out-of-pocket limit on annual drug spending beginning in 2025.

The Act also empowers Medicare to negotiate lower prices for a select number of drugs with the highest Medicare spending. This negotiation process will start with 10 Medicare Part D drugs in 2026, and by 2029, the Centers for Medicare and Medicaid Services (CMS) will negotiate 20 Part B or D drugs annually.

The Financial Implications of the Inflation Reduction Act

The Congressional Budget Office estimates that the Inflation Reduction Act’s package of drug pricing provisions would decrease the federal deficit by $237 billion between 2022 and 2031. It also predicts a 50 percent reduction in net prices for negotiated drugs among those with the greatest aggregate Medicare expenditures.

These reductions in drug prices will have a significant impact on out-of-pocket costs for older adults. This is particularly important for populations such as women, Black and Latino people, LGBTQI+ people, and disabled people, who often face financial constraints and have had trouble affording their medication.

The Impact of Lower Drug Prices Across Populations

Lower drug prices will have substantial benefits across various populations. Even small reductions in drug prices can significantly impact access and affordability, particularly for Black, Latino, women, LGBTQI+, and disabled Medicare enrollees who often face financial constraints.

For example, Black and Hispanic Medicare enrollees have median savings of just 12 percent and 8 percent, respectively, of white enrollees. Women enrolled in Medicare have median savings of just 72 percent of men’s and spend 13 percent more in out-of-pocket costs. Meanwhile, LGBT individuals are more likely to have low incomes, and disabled people are twice as likely as nondisabled people to live in poverty.

The Benefits of Medicare Drug Price Negotiation for Different Populations

The Medicare drug price negotiation will help millions of older adults and disabled people who depend on some of the most cost-prohibitive medications. This section explains how different populations can expect to benefit from lower medication costs through the Inflation Reduction Act drug pricing negotiations based on the disease burdens they commonly face.

Black Medicare Enrollees

Black Americans disproportionately struggle to access the medications they need. Many drugs likely to be negotiated treat conditions that Black older adults are more likely to have, such as blood clots, Type 2 diabetes, prostate cancer, overactive bladder, asthma, schizophrenia, irritable bowel syndrome, and chronic heart failure.

Latino Medicare Enrollees

Latino older adults struggle to access prescription medication at greater rates than white enrollees. Many drugs likely to be negotiated treat conditions Latino enrollees frequently experience, such as diabetes, overactive bladder, and schizophrenia.

Female Medicare Enrollees

Women constitute more than half of Medicare beneficiaries and approximately two-thirds of Americans ages 85 and older. However, due to cost, women struggle to afford medications at higher rates than men and are less likely than men to adhere to medical care. Many drugs likely to be negotiated will help women, particularly those treating conditions like breast cancer, overactive bladder, some autoimmune disorders, and irritable bowel syndrome.

LGBTQI+ Medicare Enrollees

Compared with straight/heterosexual and cisgender individuals, lesbian/gay, bisexual, and transgender individuals are significantly more likely to have delayed or not get prescription medications. LGBTQ individuals have higher rates of substance use and smoking than their heterosexual counterparts, making drugs that treat asthma, blood clots, and chronic obstructive pulmonary disease particularly important.

Disabled Medicare Enrollees

More than 36 percent of Medicare enrollees have four or more chronic conditions. Cardiovascular diseases, diabetes, and arthritis are Medicare enrollees’ most common chronic conditions. Many people with disabilities under age 65 are eligible for Medicare, many of whom have low incomes.

Conclusion

Medicare drug price negotiation will help Black and Latino people, women, LGBTQI+ people, disabled people, and others who often have trouble affording medications. The significant potential savings accompanying Medicare negotiations enabled by the Inflation Reduction Act will compound as more drugs are subject to negotiation each year. Medicare enrollees can expect improved access to and affordability of prescription drugs for years.

FAQs

What is the Inflation Reduction Act?

The Inflation Reduction Act is a law that introduces historic reforms to address the high costs of prescription drugs. It includes provisions to limit out-of-pocket costs for most insulin products, expand the low-income subsidy for Part D coverage, and set a new out-of-pocket limit on annual drug spending.

How will the Inflation Reduction Act impact Medicare drug prices?

The Act empowers Medicare to negotiate lower prices for a select number of drugs with the highest Medicare spending. This negotiation process will start with 10 Medicare Part D drugs in 2026, and by 2029, the Centers for Medicare and Medicaid Services (CMS) will negotiate 20 Part B or D drugs annually.

Who will benefit from the Medicare drug price negotiation?

The Medicare drug price negotiation will help millions of older adults and disabled people who depend on some of the most cost-prohibitive medications. This includes women, Black and Latino people, LGBTQI+ people, and disabled people, who often face financial constraints and have had trouble affording their medication.

What are the financial implications of the Inflation Reduction Act?

The Congressional Budget Office estimates that the Inflation Reduction Act’s package of drug pricing provisions would decrease the federal deficit by $237 billion between 2022 and 2031. It also predicts a 50 percent reduction in net prices for negotiated drugs among those with the greatest aggregate Medicare expenditures.

How do lower drug prices impact different populations?

Lower drug prices will have substantial benefits across various populations. Even small reductions in drug prices can significantly impact access and affordability, particularly for Black, Latino, women, LGBTQI+, and disabled Medicare enrollees who often face financial constraints.

Source: AmericanProgress.org