Updated: Dec 12, 2022
Prescription Importation Offers Relief from Persistent Drug Price Gaps
Washington, D.C. – On Tuesday, President Joe Biden took a major step to reign in U.S. drug prices by signing the Inflation Reduction Act into law, but the Campaign for Personal Prescription Importation says it is ‘not enough’ for millions of Americans whose lives are at stake because they can’t currently afford their critical daily medications.
“We applaud the Inflation Reduction Act as a major step toward reigning in prescription drug costs, but for millions of Americans this bill alone won’t result in the savings they need in order to afford critical daily medications,” says Jack Pfeiffer, Executive Director of the Campaign for Personal Prescription Importation. “While Medicare price negotiations are a noble undertaking, lives are currently at stake. One in four Americans report difficulties affording their medications, and this legislation won’t go into effect for years.”
Restrictions to medication access caused by costs can be deadly, says the National Bureau of Economic Research and West Health Policy Center. According to Gallup, 30% of Americans now report forgoing treatment in the prior three months due to costs, and at least 18 million can’t afford medications.
“Americans need and deserve relief from the dire consequences of high drug prices, and personal prescription importation is an immediate lifeline,” says Pfeiffer.
The CDC estimates that over 4 million Americans already import medications. Americans who import their prescription medications from safe, licensed Canadian pharmacies report saving over $3,700 a year on average. The leading reasons they cite for importing their medicines are soaring U.S. drug prices.
The Inflation Reduction Act has significant shortcomings:
Price negotiations won’t take effect until 2026
Price negotiations will be limited in size/scope (10 drugs in 2026, 15 drugs in 2027 and 2028, and only 20 drugs in 2029 and beyond)
There are also numerous exceptions and exclusions, most notably for new formulations such as extended relief, orphan drugs, plasma derived products, etc.
Insurers, pharmaceutical firms, and healthcare providers could presumably ramp up costs for other drugs and services or raise Part D premiums
Medicare’s new negotiation benefits could result in people with private employer health insurance paying more for prescription drugs
How Much Might You Save?
How Will the Inflation Reduction Act Work & Who Will Benefit
Despite its shortcomings, the Inflation Reduction Act is the first major update to America’s broken prescription drug system since 2003. Here is a brief synopsis of the drug pricing sections:
Negotiating Drug Prices Starting in 2026, the Centers for Medicare & Medicaid Services (CMS) will work directly with drugmakers to reduce the price of 10 of the most expensive drugs covered under Part D. Between 2027 and 2029, additional drugs will be included in the cost negotiations. The Biden Administration estimates 5-7 million Medicare beneficiaries could see their prescription drug costs decrease because of the provision to negotiate Medicare drug prices.
Out of Pocket Caps
Starting in 2025, annual out-of-pocket Medicare Part D prescription drug outlays will be capped so that no enrollee will be required to pay more than $2,000 out of pocket per year. This provision will directly benefit the 1.4 million Medicare patients who spend more than $2,000 on medications each year. Additionally, Part D premiums will be capped at 6% a year from 2024 through 2029. And beginning in 2024, the IRA eliminates the 5% coinsurance requirement above the Medicare Part D “catastrophic” threshold.
Insulin price guardrail Retirees with diabetes have been slammed by the escalating price of insulin in recent years, but those days may soon be over. In 2023, 3.3 million Medicare Part D beneficiaries with diabetes will benefit from a guarantee that copays for insulin will be capped at $35 for a month’s supply.
Extra Help Beginning in 2024, the income threshold for the full Extra Help bumps up from 135% to 150% of the federal poverty level. Extra Help, the federal low income subsidy program, offers assistance in paying for their monthly Part D premiums, annual deductibles, and co-payments related to Medicare prescription drug coverage.This year, it’s available for a single person with an income of around $20,000 or roughly $27,000 for a couple. Currently, around 500,000 people on Medicare have incomes between 135-150% of the poverty level and receive a partial benefit.