With the passage of the Inflation Reduction Act of 2022, efforts to reform rising prescription medication costs are now moving forward. The bill, which includes provisions allowing Medicare to begin negotiating drug prices for the first time, was passed in August 2022.
The Biden Administration has released a timeline for the rollout of this negotiation process, which will begin in 2023. Changes to prescription medication costs are slated to go into effect in 2026.
Milestone dates in the pricing negotiation process include the following:
- September 1, 2023 – The Center for Medicare and Medicaid Services (CMS) will provide a list of the 10 Medicare Part D drugs whose prices will be negotiated.
- October 1, 2023 – Companies chosen to take part in the negotiation process must sign agreements to participate by this date.
- February 1, 2024 — CMS will provide initial offers of a maximum ‘fair price’ to those companies who opt to take part in the program. These companies who wish to engage in the negotiation will have 30 days from receiving these offers to accept the offer or provide a counteroffer.
- September 1, 2024 – The federal government will announce the negotiated maximum fair price for each of these 10 drugs.
- January 1, 2026 – Newly negotiated maximum fair prices will become effective for the 10 drugs.
CMS has also released a PDF summary with some additional information on the negotiation program.
The Inflation Reduction Act’s provisions included other benefits for Medicare beneficiaries, including a monthly cap of $35 on insulin, many vaccines offered free of charge, and, for Part D enrollees, a yearly $2,000 out-of-pocket spending limit for prescription medications as of 2025.