How Medicare prescription drug coverage would change under US Senate Democrats’ bill

WASHINGTON — A major spending bill from U.S. Senate Democrats would allow Medicare, for the first time in its history, to begin negotiating prices for certain high-priced prescription drugs — a proposal that has been around for years but who has never been so close to the finish line.

Below The legislationMedicare would begin negotiating prices for some drugs in Part D, the program’s drug plan, starting at age four.

In addition, drug spending for seniors would be capped at $2,000 per year starting in 2025, which would help pay for expensive drugs like those used to treat cancer. And beneficiaries would receive all of their covered vaccines, including those for shingles, free of charge.

“We will finally give Medicare the power to negotiate the price of prescription drugs,” Senate Majority Leader Chuck Schumer, a Democrat from New York, said Saturday. “After years of trying, we are finally going to cap out-of-pocket spending and make vaccines free for our seniors. After years of trying.

Drug inflation

A disappointment for Democrats, however, came on Saturday when the House Congressman spoke out against a section of the measure aimed at drug inflation — it would have forced drugmakers to pay rebates if drug prices prescription drugs in private insurance plans were rising faster than inflation.

The inflation brake would still apply to drugs in Medicare, and that’s important. A Kaiser family foundation study said price increases outpaced inflation for half of all Medicare-covered drugs in 2020.

The Medicare prescription drug reforms are included in a budget bill known as reconciliation, the main feature of which appeals to Democrats is that the end product cannot be blocked by Republicans under US Senate rules.

Initially, the comprehensive prescription drug provisions were scored by the nonpartisan Congressional Budget Office as reducing the deficit by $288 billion over 10 years, though a new score reflecting last-minute changes to the draft law is expected.

The Senate was heading for the start of debate on the measure on Saturday, with a final vote over the weekend or Monday after a series of votes on the amendments. Schumer said he believed the legislation would be supported by all 50 Democrats, after tax agreement struck with Arizona Sen. Kyrsten Sinema, and it is expected to be picked up by the House on Friday.

Medicare is the federal health insurance program for Americans age 65 and older, as well as some younger people with disabilities. About 64 million people were enrolled in Medicare since the most recent coverage year, and nearly 49 million in some form of prescription drug plan.

Public support

While pharmaceutical companies have opposed negotiating Medicare prices, saying it would hurt research and development of new drugs and innovation, poll found strong public support.

The nonpartisan Kaiser Family Foundation regularly conducts tracking polls on health issues and found in October that 83% of respondents supported bargaining, even after being briefed on arguments from both sides.

The same survey found that 27% of people over 65 taking four or more medications said they had problems paying for their medications.

Here’s what the Democrats’ proposal would do for Medicare prescription drug costs, based on analysis by the Kaiser Family Foundation, Senate Democrats summary and the legislative text:

• Starting in 2026, the prices of 10 high-priced prescription drugs in Medicare Part D would be directly negotiated by the federal government. The number of drugs traded would jump to 15 in 2027. Then in 2028 it would cover 15 drugs in Parts D and B – typically, these Part B drugs are administered by doctors or as outpatient treatment in hospital. In 2029 and later, it would include 20 Part D and Part B drugs.
• Drugs that would be eligible would include those that have no generic equivalents or what are called biosimilar equivalents — copies of more complex drugs. Depending on their type, it would take nine years or more since their approval by the Food and Drug Administration, which means that new drugs would not be included.
• Pharmaceutical companies that fail to comply with the negotiation would face high excise duties and potential civil financial penalties.
• Any health and human services secretary would have to negotiate the maximum number of drugs allowed in any given year, which Democrats say would prevent a future Republican presidential administration from balking at negotiating.
• Drugmakers would have to pay rebates to the Medicare trust fund under certain circumstances, starting in 2023. They would have to pay if their drug prices rise faster than the rate of inflation, except for drugs with an average annual cost of less than $100. Penalties would be imposed on those who do not pay the rebates. The inflation brake would apply only to medicare and not to private drug plans.
• Out-of-pocket drug spending would be capped at $2,000 per year, starting in 2025, and seniors could spread their drug costs throughout the year. In 2024, a coinsurance requirement of 5% above the Medicare Part D “catastrophic” threshold, which was $7,050 in out-of-pocket expenses in 2022, would be eliminated.
• A low-income subsidy program that provides additional assistance with Medicare costs to very poor Medicare beneficiaries would be expanded beginning in 2024. Seniors are now eligible for full program benefits if they have income up to 135% of the federal poverty line, or about $9,900 per year for an individual and $15,600 for a couple. The Senate plan would extend full benefits to people up to 150% of the federal poverty level, or $15,510 for an individual and $30,950 for a couple.
• There would be no charge for vaccines covered by the Part D program, starting in 2023. This would include vaccines recommended by the Advisory Committee on Immunization Practices.
• Part D premium growth would be capped at 6% per year from 2024 to 2029.
• A Trump administration drug reimbursement rule that was set to take effect in 2027 would be repealed.