Will you pay less for your prescriptions under bill just passed by Senate? What to know

·4 min read
Phelan M. Ebenhack/AP

The United States Senate just passed a sweeping bill that could drastically change the cost of health care for millions of people.

The Inflation Reduction Act, a $740 billion bill which is set to reduce the United States’ deficit by more than $300 billion, passed along party lines on Aug. 7. The bill includes provisions for combating climate change, tax reforms and health care protections.

Cheaper prescriptions

The bill establishes a national protocol for negotiating the price of some prescription drugs for the first time.

Starting in 2026, the bill will allow the federal health secretary to negotiate the price of 10 expensive drugs covered by Medicare, according to NPR’s reporting. The list of eligible medications will expand to include a total of 20 prescriptions in 2029.

While the bill only applies to some prescriptions and some users, establishing price negotiations as a practice is still beneficial, according to Stacie Dusetzina, an associate professor at Vanderbilt School of Medicine.

“This is a huge step towards bringing drug price negotiation into the program for the first time,” Dusetzina told PBS NewsHour. “It is a modest start.”

The bill will also require drug companies to offer Medicare patients a rebate when the price of a prescription outpaces the rate of inflation, NPR reported.

In 2020, half of all drugs covered by Medicare saw their prices rise more than the inflation rate, according to data from the Kaiser Family Foundation. The Inflation Reduction Act will limit the rate at which drug prices can rise, keeping them proportional to inflation.

Caps on out-of-pocket costs

The bill sets a $2,000 cap on out-of-pocket expenses for Medicare Part D beneficiaries. This part of Medicare provides coverage for prescription medication. The cap goes into effect in 2025.

Data from the Kaiser Family Foundation shows that in 2019, 1.2 million beneficiaries spent more than $2,000 out-of-pocket on their medications annually.

There is currently no cap on expenses.

Setting a limit on drug expenses will have a major impact on beneficiaries, who are mostly people older than 65.

“This would have huge implications for people needing expensive drugs like those used for treating cancer and other complex illnesses,” Dusetzina said. “This is a major, major improvement over today’s benefit.”

Insulin prices

In the Democrats’ initial proposal, the bill included a $35 cap on the cost of a month’s supply of insulin for both Medicare users and private insurance beneficiaries. However, the provision did not make it into the bill’s final version.

Instead, the Inflation Reduction Act includes the cap only for Medicare recipients. Those enrolled in Medicare will now pay no more than $35 for a month’s supply of insulin.

Extended subsidies

The bill also extends Affordable Care Act subsidies for three more years.

There are 14.5 million households enrolled in private insurance through the public marketplace, which the Affordable Care Act made possible in 2010, according to data from the Kaiser Family Foundation. Out of those households, nearly 13 million rely on subsidies to afford coverage, as of 2022.

In 2021, The American Rescue Plan enacted health insurance subsidies for 2021 and 2022 to help households pay their insurance fees, CNBC reported. Without theses subsidies, millions of people would have more difficulty finding affordable coverage.

The subsidies will remain in tact through 2025, allowing millions of households to find and keep more affordable health plans.

Onto the House

The Inflation Reduction Act now moves to the House of Representatives where it will need to pass before it can be sent to President Joe Biden to sign into law.

The House is expected to take up the bill Aug. 12 when members return briefly from their summer recess, CNN reported.