The Lower Drug Costs Now Act purportedly sought to lower the cost of prescription medicines. Like the Inflation Reduction Act, it sounded like a good deal. However, there are significant concerns surrounding the IRA and how it will lower the costs of some drugs at the expense of access to many others.
When the law goes into effect, we can expect fewer treatment options and higher Medicare Part D premiums. While government negotiations (or price setting) might lower costs for Medicare, program enrollees aren’t seeing much of a benefit. In fact, the premiums they pay for standalone Part D (drug coverage) plans are rapidly rising.
The cost-cutting measures in the IRA benefit the program but create higher costs for health insurance plans. To make up for that lost revenue, those plan providers have increased the premiums, causing standalone prescription drug plans to rise by an average of 21 percent in the 2024 plan year.
It would be reasonable to assume that Medicare cost savings would be reinvested in the program to lower out-of-pocket costs for their beneficiaries. Reasonable, but wrong. The money goes not to seniors but partly to green energy. The federal government should not be doing so on the backs of older adults.
The government estimates that IRA Medicare provisions will save $266 billion from 2023 to 2031. Still, Medicare is not its own fiscal entity — it’s merely one part of the unified federal budget, a budget that will have to bankroll $670 billion in IRA environmental and clean energy spending. According to polling, seniors receive no benefit, which is the opposite of what they want.
One survey found that 86 percent of seniors thought Medicare savings should be used to lower prescription drug costs instead of spending on unrelated tax credits and subsidies. Unsurprisingly, the survey also found that 83 percent of seniors felt the IRA had not helped them as they thought it would.
Californians feel similarly, with more than half saying they skipped or postponed care due to cost in the last year. Seniors depend on Medicare to pay their medical bills in their retirement years, typically when most people face age-related healthcare issues and spend more on care than they did when they were younger. By cutting healthcare spending on Medicare and then using that money to support non-healthcare government programs, the IRA has done all seniors a big disservice.
Seniors fear that government price setting for medications will discourage pharmaceutical developers from investing in new drugs or finding innovative uses for existing ones and that price setting will limit access to already existing medications as insurers reduce plan options. Seniors deserve more access to drugs, not less.
Despite some positive provisions in the IRA, it has not done much for its foremost goal: helping seniors on Medicare. Should Congress and the federal government want to return to this vision, they will take immediate action on patient-centered legislation.
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