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CMS announced that the Inflation Reduction Act would reduce the cost of prescription drugs and premiums of healthcare plans

CMS announced that through the Inflation Reduction Act, the Biden administration aims to reduce prescription drug costs and make health insurance more affordable.

Through the act, the Biden administration is aiming to reduce the costs by

  • Lowering the prescription drugs costs in Medicare by negotiations with the manufacturers

  • In Medicare, by 2025, a yearly cap of $2,000 on out-of-pocket spending on prescription drugs

  • Aiming to reduce the premiums of healthcare plans through

CMS announced that before the Inflation Reduction Act, more than 5 million Americans with Medicare faced challenges in affording prescription drugs.

CMS further announced that the average cost of prescription drugs in the US is $1,500 and the costs of prescription drugs are usually higher in the US. Through the Inflation Reduction Act, CMS aims to increase competition and reduce the costs of prescription medicines.

Medicare announced that in 2023, it would negotiate on ten drugs on which Medicare spends the highest amount in Part D and has no competition. CMS further announced that Medicare will choose another 15 drugs in 2027 for price negotiation, 15 more drugs from Part B and Part D in 2028, and 20 more from Part B and Part D every year.

In 2025, a new Manufacturer Discount Program will be initiated; the manufacturers must provide discounts. A 10% discount has to be provided in the initial phase, and a 20% discount was mandated in the catastrophic phase.

Government reinsurance in the catastrophic phase will reduce from 80% to 20% for most branded products in Part D drugs. Currently, Medicare pays 80% of the costs for Part D drugs.

Manufacturers have to provide rebates if they increase the prices of the pharmaceuticals above the inflation.

The Inflation Reduction Act also aims to reduce the out-of-pocket costs of vaccines in Medicare, Medicaid, and the Children’s Health Insurance Program.

CMS announced that the people enrolled under Medicare drug coverage would not pay for the vaccines recommended by Advisory Committee on Immunization Practices (ACIP).

Vaccines recommended by ACIP will be provided at no cost for Americans enrolled in Medicaid and CHIP from October 1, 2023.