New Medicare Rules Tackle Prescription Drug Prices

This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article discussing  the provisions of the Inflation Reduction Act of 2022 that are intended to lower prescription drug costs for Medicare enrollees and to slow drug spending by the federal government:

Here’s an overview of the changes to the Medicare program — which covers 64 million seniors and people with disabilities — and timelines for when they take effect.

Drug Price Negotiation

For the first time, the federal government will negotiate lower prices for some of the highest-cost drugs covered under Medicare Part B and Part D. The first 10 drugs selected for the negotiation program were announced in late August 2023. The negotiated “maximum fair prices” for the initial 10 drugs are to be published by September 1st, 2024, and go into effect starting January 1st, 2026.

Up to 15 drugs will be subject to negotiation each year for 2027 and 2028, and up to 20 more drugs for each year after that.

Inflation Rebates

By one estimate, the list prices of about half of all drugs covered by Medicare between 2019 and 2020 rose faster than inflation. To discourage this practice, manufacturers of drugs covered under Medicare Part B and Part D will be required to pay rebates to the federal government if price increases for brand-name drugs without generic or biosimilar competition exceed an inflation-adjusted benchmark (beginning in 2023).

Medicaid, a federal program that provides health coverage for low-income Americans of all ages, already receives…

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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