Drugmakers say 'patients lose when the government sets prices.'
Payers, providers, and patient advocates are mostly praising the healthcare provisions included in Sunday's passage of the $750 billion Inflation Reduction Act.
PhRMA is not pleased and has long maintained that “patients lose when the government sets prices.”
On a hyper-partisan 51-50 vote -- with no Republicans voting for the 750-page bill -- the Senate needed the vote of Vice President Kamala Harris to send the bill to the Democrat-controlled House, which is expected to take it up this month.
The IRA has three key healthcare provisions.
First, it earmarks about $64 billion to extend through 2025 the health insurance subsidies created under the American Rescue Plan, which Democrats say will ensure affordable health insurance for 13 million people, with some premiums continuing to be as low as $10 a month.
Second, the bill gives the Department of Health and Human Services the long-sought authority to negotiate lower drug prices for Medicare, starting in 2026. However, that negotiating power will be limited to only 10 drugs in 2026, 15 drugs in 2027, and 20 drugs in 2029 and beyond.
The Congressional Budget Office estimates that these provisions would cut the deficit by $287 billion through 2031, with $321 billion in gross savings and $34 billion in new spending.
Third, the bill caps monthly insulin costs at $35 for Medicare patients, and limits overall drug costs to $2,000 a year. Democrats had attempted unsuccessfully to include that monthly cap for commercial plans, but that provision was stripped by Republicans in the reconciliation process.
PhRMA Hates It
Pharmaceutical Research and Manufacturers of America President and CEO Stephen J. Ubl says passage of the IRA "may feel like a political win for Democrats, but it’s really a tragic loss for patients."
"This drug pricing plan is based on a litany of false promises," Ubl says. "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. 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."
“They’re also misleading the American people when they say this bill fixes the affordability challenges patients face. This bill provides almost no relief to millions of individuals trapped in an insurance system that discriminates against sick patients. Under this bill, patients will still be forced to pay more for medicine than their insurance company pays. Democratic leaders seized every opportunity to make this bill worse for patients, including giving insurers the green light to raise premiums by six percent and delaying a rebate rule that would provide immediate relief to millions of seniors. When given the choice to stand with patients or insurers and middlemen, Senate Democrats stood by insurers and middlemen.
"Once the government can set prices for life saving medicines, it will demand even more control over the healthcare of American patients and the collateral damage from this bill will only grow," Ubl says. "There is still time to reject this partisan bill and work on bipartisan reforms that lower costs at the pharmacy and protect the hope patients have for new treatments. We urge the House to do what's needed to stop this dangerous bill and deliver the kind of meaningful patient-centered reforms the American people are counting on."
Providers generally noted that the bill is lacking in some areas, but they embraced it as a significant step forward.
Bruce Siegel, MD, president and CEO of America's Essential Hospitals, says extending the health insurance subsidies "would safeguard access to care for millions of individuals and families—a critically important outcome, given the ongoing threat of COVID-19 and emerging public health challenges, such as monkeypox."
Still, Siegel says hospitals didn't get all they wanted.
"We are disappointed it lacks funding for hospital workforce and infrastructure needs. Essential hospitals face persistent staffing shortages, high labor costs, and infrastructure constraints," he says. "They need more funding from Congress to meet these challenges as the impacts of the pandemic continue."
Blue Cross Blue Shield Association President and CEO Kim Keck says extending the tax credits "will protect nearly 13 million Americans from cost increases at a time when the price of everything—from gas to groceries—is rising. This move keeps real money in the pocketbooks of Americans and gives them real peace of mind."
Matt Eyles, president and CEO of America's Health Insurance Plans, says "every American deserves access to affordable coverage and high-quality care, and the Senate's action will continue vital support that millions of hardworking American families need to purchase their own health coverage in the years to come."
Margaret A. Murray, CEO of the Association for Community Affiliated Plans, says her organization "led the call for the extension of enhanced APTCs for the past year to keep premiums affordable and to promote the uptake of comprehensive health coverage through Marketplaces."
"There is more work for Congress and the Administration to do, particularly to strengthen Medicaid and CHIP for children and postpartum individuals, but this is an excellent start," Murray says. "Because this bill helps keep millions of people covered, we urge the House to send this bill to President Biden's desk for his signature with all due haste."
The Purchaser Business Group on Health has raised concerns about stripping the insulin price cap from commercial plans.
"Since the measures will now apply to Medicare only, the legislation 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," PBGH said in a media release. "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."
Louise Norris, an analyst with HealthInsurance.org, says the subsidies will bolster marketplace enrollment.
"Without action from Congress, millions of people will likely see their subsidies decrease or disappear in 2023, and 3 million current enrollees might lose their coverage altogether," Norris says. "The Senate's vote to pass this legislation is a step toward ensuring these hard working Americans will still be able to afford their health coverage next year, and we hope to see it pass quickly in the House."
Calling access to affordable insulin "a matter of life or death for people with type 1 diabetes," the Juvenile Diabetes Research Foundation blasted as "unconscionable" the vote of 43 Republican Senators who stripped away the provision to cap insulin costs at $35 for commercial plans.
"While the Senate removed the $35 per month cap for commercial plans, the Inflation Reduction Act still contains other critically important insulin affordability measures, including a Medicare provision to cap the monthly cost of insulin and limit overall drug costs to $2,000 per year," JDRTF says.
Robert Weissman, president of Public Citizen, noted but did not identify "serious flaws and gaps in this legislation," but nonetheless called the bill "a huge step forward for the American people."
“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.”
Purchaser Business Group on Health
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
The IRA earmarks about $64 billion to extend through 2025 the health insurance subsidies created under the American Rescue Plan, which Democrats say will ensure affordable health insurance for 13 million people, with some premiums continuing to be as low as $10 a month.
The bill gives HHS the long-sought authority to negotiate lower drug prices for Medicare, starting in 2026. However, that negotiating power will be limited to only 10 drugs in 2026, 15 drugs in 2027, and 20 drugs in 2029 and beyond.
The bill caps monthly insulin costs at $35 for Medicare patients, and limits overall drug costs to $2,000 a year. Democrats had attempted unsuccessfully to include that monthly cap for commercial plans, but that provision was stripped by Republicans in the reconciliation process.