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HomeRetailers‘Once-in-a-generation’ prescription drug pricing reform could be coming. Here’s what we know

‘Once-in-a-generation’ prescription drug pricing reform could be coming. Here’s what we know

As individuals and families grapple with surging prices, there’s one category that has a history of rising faster than inflation: prescription drugs.

Now, the new Senate reconciliation bill put forward by Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., aims to help give Americans relief from those rising health-care costs.

The Senate proposal includes meaningful reforms like allowing Medicare to negotiate prescription drug prices and establishing limits on increases to those prices, according to Tricia Neuman, senior vice president and executive director for the program on Medicare policy at KFF, a non-profit organization focused on national health issues.

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It also includes a $2,000 cap on out-of-pocket spending that would provide relief for Medicare beneficiaries who take high-price prescription drugs.

“It’s really the first time since 2010 that Congress has moved forward on any legislation to improve drug coverage substantially for people on Medicare,” Neuman said.

Notably, the legislation would also limit drug price increases for people with private insurance.

The proposal is expected to be considered by the Senate next week once the parliamentarian gives the go ahead that the provisions in the package may be moved by a Democratic majority.

The proposal is very similar to a bill passed by the House, according to Neuman, which will consider the Senate’s version after it has passed. Some House Democrats already expressed strong support for the bill this week.

“We have a once-in-a-generation opportunity to get this across the finish line, and I am deeply committed and excited about getting it done,” Rep. Colin Allred, D-Texas, said during a webcast hosted by Invest in America this week.

How the bill may tackle inflation

Rep. Susie Lee, D-Nev., called the proposal “life-saving legislation” for families and seniors during a separate webcast also hosted by Invest in America this week.

“It will ensure that drug companies will no longer be able to raise prices faster than the rate of inflation, so that families can keep up with those costs,” Lee said.

Prescription drug prices have sometimes increased two to three times the rate of inflation, said Glen Fewkes, director of health-care access and affordability at AARP, during the Invest in America event.

If other prices increased at the same rate, gas would now cost $12.20 per gallon and milk would cost $13 per gallon, he said.

We feel this can really tackle inflation and really put money back into seniors’ pockets.

Glen Fewkes


Limiting out-of-pocket Medicare Part D prescription drug costs to $2,000 per year would make a huge difference for the average Medicare beneficiary with a median income of $30,000 per year, Fewkes said. Currently, Medicare beneficiaries pay 5% out of pocket after they have spent $7,050 for the year.

But for patients who have multiple medications, or expensive prescriptions that cost five-figure sums, 5% can be a substantial burden, Fewkes said.

“We feel this can really tackle inflation and really put money back into seniors’ pockets,” Fewkes said.

Changes included in the Senate bill

The federal government would be given the ability to negotiate the prices of some high-cost drugs covered under Medicare Parts B and D. That number of negotiated drugs would gradually increase from 10 in 2026 to 15 in 2027, 15 in 2028 and 20 in 2029.

The bill would also limit the annual price increases on prescription drugs for people covered by Medicare and private insurance. Rebates would be imposed on drug manufacturers that increase prices faster than inflation.

A $2,000 out-of-pocket cap on Medicare Part D spending would be implemented, while the 5% coinsurance above the Medicare Part D catastrophic threshold would be eliminated.

It would also eliminate cost sharing for adult vaccines under Medicare Part D. Vaccine access would also be improved for Medicaid and the Children’s Health Insurance Program.

The bill also extends subsidies for people who buy their own health insurance, which was set to expire this year, for three more years.

How much savings to expect

Amid one of the worst public-health crises in history, a record number of Americans are without health insurance.

Amid one of the worst public-health crises in history, a record number of Americans are without health insurance.

John Fedele

The American Rescue Plan helped bring health-care premiums down for millions of Americans, Lee noted. If those subsidies expire, the average middle class family of four will see a premium hike of around $6,600, she said. The average middle class couple near retirement will have to pay almost $16,000 more.

“Families simply can’t afford that right now,” Lee said. “We must get these subsidies passed.”

It’s difficult to know exactly how much Americans may save on prescription drugs, according to KFF, since the specific drugs have not yet been chosen and the price changes have not yet been determined.

“It’s pretty hard to say how many people would benefit and what their benefit would be,” Neuman said.

Notably, insulin was not included in the Senate bill as a drug to be negotiated, while it was included in the House version, Neuman noted. The House bill also sought to put a $35 monthly cap on insulin for people with Medicare or private insurance, she said.

The Senate has separately been discussing other measures to address insulin costs. It remains to be seen whether or not some or all of those proposals could be incorporated in the reconciliation bill, Neuman said.

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