Under the new Drug Price Negotiation Program, the number of drugs subject to price negotiation will be 10 Part D drugs for 2026, another 15 Part D drugs for 2027, another 15 Part D and Part B drugs for 2028, and another 20 Part D and Part B drugs for 2029 and later years. The Inflation Reduction Act amends the non-interference clause by adding an exception that requires the Secretary of HHS to negotiate prices with drug companies for a small number of single-source brand-name drugs or biologics without generic or biosimilar competitors that are covered under Medicare Part D (starting in 2026) and Part B (starting in 2028). A recent KFF Tracking Poll finds large majorities support allowing the federal government to negotiate drug prices and this support holds steady even after the public is provided with the arguments that were made for and against this proposal. Medicare Part D and Part B drug spending is highly concentrated among a relatively small share of covered drugs, mainly those without generic or biosimilar competitors. The Part D non-interference clause has been a longstanding target for some policymakers because it has limited the ability of the federal government to leverage lower prices, particularly for high-priced drugs without competitors. Instead, Medicare reimburses providers based on a formula set at 106% of the Average Sales Price (ASP), which is the average price to all non-federal purchasers in the U.S, inclusive of rebates (other than rebates paid under the Medicaid program). The law that established the Part D benefit included a provision known as the “ noninterference” clause, which stipulates that the HHS Secretary “may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors, and may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.” In addition, the Secretary of HHS does not currently negotiate prices for drugs covered under Medicare Part B (administered by physicians). Under the Medicare Part D program, which covers retail prescription drugs, Medicare contracts with private plan sponsors to provide a prescription drug benefit. Require the Federal Government to Negotiate Prices for Some Drugs Covered Under Medicare This brief summarizes these provisions and discusses the expected effects on people, program spending, and drug prices and innovation. Further delay implementation of the Trump Administration’s drug rebate rule, beginning in 2027.
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Expand eligibility for full benefits under the Medicare Part D Low-Income Subsidy Program, beginning in 2024.Eliminate cost sharing for adult vaccines covered under Medicare Part D and improve access to adult vaccines in Medicaid and CHIP, beginning in 2023.Limit monthly cost sharing for insulin to $35 for people with Medicare, beginning in 2023.Cap out-of-pocket spending for Medicare Part D enrollees and make other Part D benefit design changes, beginning in 2024.Require drug companies to pay rebates to Medicare if prices rise faster than inflation for drugs used by Medicare beneficiaries, beginning in 2023.
The prescription drug provisions included in the Inflation Reduction Act will: CBO estimates that the drug pricing provisions in the law will reduce the federal deficit by $237 billion over 10 years (2022-2031). This legislation has taken shape amidst strong bipartisan, public support for the government to address high and rising drug prices. The Inflation Reduction Act of 2022, signed into law by President Biden on August 16, 2022, includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government.
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