Bill authorizes Medicare prescription drug negotiations

Senate Democrats plan to vote on the measure in a procedure called reconciliation that allows lawmakers to pass a bill by a simple majority, a fast-track process that does not allow for a filibuster of legislation. The United States House of Representatives passed a bill in 2021 that contains most of the provisions of the Senate proposal. Lawmakers are awaiting a decision by the Senate parliamentarian on which elements of the proposed legislation – which also includes changes to tax laws and climate and energy provisions – are allowed under the reconciliation process.

“The prescription drug pricing reforms brought together in the reconciliation bill are a huge win for older Americans,” said Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer. “By placing a limit on what they will have to pay out of pocket for prescriptions and allowing Medicare to negotiate lower drug prices, this legislation will save seniors money at the pharmacy and will help make ends meet.”

According to a summary released by Senate Democrats, here are the main elements of the Medicare portions of the bill.

Changes to Part D

• For the first time, out-of-pocket expenses for Part D prescription drugs would be capped. By 2025, beneficiaries would not have to pay more than $2,000 per year for their share of Part D drugs.
• Starting in January 2023, all vaccines will be free in Medicare.
• Part D premiums could not increase by more than 6% per year until at least 2029.
• The income threshold for recipients to qualify for a grant to help with Part D costs would be increased from 135% of the federal poverty level ($18,347 for an individual in 2022) to 150% ($20,385 for an individual in 2022).

Negotiate drug prices

The Secretary of Health and Human Services would be authorized to begin negotiating prices for 10 expensive prescription drugs in 2023, with negotiated prices taking effect in 2026. The number of drugs whose prices would be negotiated on behalf of Medicare would increase to 15 in 2028 and 20 in 2029.

Inflation reimbursement

Starting in October of this year, if the price of a Part D prescription drug increases more than the general inflation rate, the drugmaker will have to reimburse Medicare for the amount of the increase that is greater than the inflation rate. Rebates for price increases above inflation for drugs covered by Medicare Part B (typically office-based infusions, such as for cancer drugs) would begin in January 2023.

Editor’s Note: This story has been updated with new information.