Thanks to the Inflation Reduction Act, championed by President Biden and Democrats in Congress, Medicare is better than ever and seniors are protected from outrageous price increases by big drug companies as a result of the law’s penalties on price increases greater than inflation. Hundreds of drugs have seen their list prices grow faster than inflation, forcing seniors to make tough decisions between needed medication and basic necessities — all while big drug companies bring in tens of billions in revenue and spend lavishly to reward shareholders. The Inflation Reduction Act has also brought down the cost of prescription medications for seniors on Medicare by capping insulin costs at $35 per month, providing free vaccines, and allowing Medicare to negotiate drug prices directly with pharmaceutical companies.
This is just the beginning: In 2025, seniors’ total drug costs will be capped at $2,000 per year and, in 2026, new savings from Medicare’s drug price negotiation will take effect. Together, these provisions will save seniors thousands of dollars on prescription drugs. These policies lower costs and improve access to care, which are essential for improving the health and well-being of millions of Americans nationwide.
BY THE NUMBERS
- Medicare beneficiaries save as much as $600 per dose thanks to the Inflation Reduction Act’s inflation-pegged price hike rebates.
- Medicare beneficiaries only pay 20 percent of the inflation-adjusted amount in copays for drugs with prices that have increased faster than the rate of inflation,
- 34 drugs will have reduced copays until the end of the year thanks to the Inflation Reduction Act.
Seniors Will Continue To Save Hundreds On Prescription Costs Through Rebates For Drug Prices That Increase More Than Inflation. Thanks to the Inflation Reduction Act, Medicare beneficiaries save as much as $600 per dose. The new law requires drug companies to pay Medicare rebates if their drug prices rise faster than inflation, and those rebates are passed on as savings to seniors. For decades, big drug companies have been launching new drugs at sky-high prices and continuously raising prices faster than inflation, hurting the individuals reliant on them all while making record profits.
Drug Prices Have More Than Tripled Since Launch For The Top 25 Drugs By Medicare Spending. According to an analysis by the AARP, drug prices have more than tripled – an average increase of 226 percent – for the 25 drugs with the highest aggregate Medicare spending since launch. All but one of the top 25 drugs’ lifetime price hikes exceeded the lifetime average rate of inflation as well, with some increasing prices as much as nine times higher than inflation.
Over 100 Drugs Hiked Prices Above Inflation This Year. According to an analysis by the Center for American Progress, 112 drugs saw their list prices hiked above the annual inflation rate in July 2023, with an average rate increase of 30 percent.
1 In 3 American Adults Report Being Unable To Take Their Medications As Prescribed Due To High Costs. According to KFF, 1 in 3 American adults report being unable to take their medication as prescribed, demonstrating how high and rising drug prices are negatively impacting health outcomes for Americans struggling with affordability challenges. Existing racial and ethnic economic disparities place additional pressures on racial and ethnic minorities and make it even more challenging to keep up with drug prices rising faster than inflation.
…All While Big Drug Companies Bring In Record Profits and Reward Shareholders With Lucrative Stock Buybacks. As hundreds of drug prices rise faster than inflation, their manufacturers are bringing in record profits. Drugmakers of the first ten drugs eligible for Medicare price negotiation under the Inflation Reduction Act have made tens of billions in revenue from Medicare and other sources while spending billions of dollars on stock buybacks and lobbying. For example, Eliquis, a drug used to treat blood clots manufactured by Bristol Myers Squibb and Pfizer, has cost Medicare over $41 billion through 2021. Meanwhile, the two companies have executed more than $97 billion in stock buybacks while bringing in nearly $91 billion in global sales and spending over $172 million on lobbying since launch.