The Daily Dish
March 22, 2023
Cutting (A Few) Seniors’ Drug Costs (A Little)
There has been an enormous amount of hype around the pharmaceutical provisions of the Inflation Reduction Act (IRA). The Biden Administration’s Fact Sheet is typical:
The Inflation Reduction Act protects Medicare beneficiaries from catastrophic drug costs by phasing in a cap for out-of-pocket costs at the pharmacy, establishing a $35 monthly cap per prescription of insulin, requiring companies who raise prices faster than inflation to pay Medicare a rebate, and allowing Medicare to negotiate prices for high-cost prescription drugs for the first time ever.
It’s great messaging, but the rubber hits the road with the answers to the questions: Who gets help and how much? Fortunately for the readers, AAF has the answers. The new study uses detailed data – courtesy of analysis by IQVIA – on Medicare beneficiaries to identify those individuals who will save from the provisions in the IRA.
The bottom line? Under 6 million – less than 10 percent – of Medicare beneficiaries will see lower drug spending as a result of the IRA and most of those savings will be modest: 69 percent of those with any savings at all will save less than $300.
This is one of those studies where the figures tell the story. Take a gander at Figure 1 (below, reproduced from the paper). The vast majority of Medicare enrollees either did not enroll in Part D, don’t fill prescriptions, already have their out-of-pocket costs subsidized, or fall below the $2,000 cap on expenses. Their lives are unchanged. The only ones affected are the 2 million with catastrophic (over $2,000) costs or those who will benefit from the rifle-shot provisions for vaccines and insulin.
Figure 2 answers the question of how much seniors will save from the IRA. These findings are shown in Figure 2. The first line focuses on the 5.6 million with savings: A full 69 percent will have savings under $300, while only 6 percent will benefit from the $2,000 catastrophic maximum.
There is a lot more to the IRA than these drug provisions. But thus far the reality falls far short of the hype.
Fact of the Day
Roughly 3 percent of U.S. agricultural land (in acres) is foreign owned, with less than 1 percent of that slice owned by Chinese nationals.