Senate passes Inflation Reduction Act to relieve pressure of health care costs in US
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The Senate has passed legislation that, if signed into law, will lower the cost of some prescription drugs and health insurance in the United States.
Specifically, the Inflation Reduction Act will reduce premiums for 13 million Americans covered under the Affordable Care Act by $800, according to a press release from the White House, and extend subsidies for health insurance plans under the ACA for 3 additional years. In addition, it will cap the amount that seniors have to pay out of pocket for prescription drugs at $2,000 every year, and will allow Medicare to negotiate drug prices with manufacturers.
The act also includes provisions that would cap insulin costs for people on Medicare at $35 per month. However, 43 Republicans voted against a provision to cap out-of-pocket costs for people with private insurance, according to the Endocrine Society.
“We all have the right to high-quality, affordable health care,” HHS secretary Xavier Becerra said in a statement. “With Senate passage of the Inflation Reduction Act, we are on the cusp of even more relief for America’s families when it comes to affording the health care they rely on and deserve.”
“No one should have to go without health care or a prescription they need because they can’t afford it,” Becerra added.
Along with health care costs, the legislation also addresses the “climate crisis,” according to the White House. Top medical organizations have previously called the health consequences of climate change a public health crisis. With more than $300 billion in investments for climate and energy, the bill boasts “the largest investment ever in combatting the existential crisis of climate change,” President Joe Biden said in the White House release.
“It addresses the climate crisis and strengthens our energy security, creating jobs manufacturing solar panels, wind turbines, and electric vehicles in America with American workers,” he said. “It lowers families’ energy costs by hundreds of dollars each year.”
The act can pay for all of this, according to Biden, “by establishing a minimum corporate tax.”
“It does not raise taxes on those making under $400,000 a year — not one cent,” he said.
The Inflation Reduction Act now goes to the House of Representatives for approval. Biden said in the press release that he looks forward to signing it into law.
References:
- Endocrine Society celebrates passage of historic insulin affordability measure. https://www.endocrine.org/news-and-advocacy/news-room/2022/endocrine-society-celebrates-passage-of-historic-insulin-affordability-measure. Published Aug. 7, 2022. Accessed Aug. 8, 2022.
- Internal medicine physicians say Inflation Reduction Act will improve access to health care. https://www.acponline.org/acp-newsroom/internal-medicine-physicians-say-inflation-reduction-act-will-improve-access-to-health-care. Published Aug. 8, 2022. Accessed Aug. 8, 2022.
- Statement by HHS Secretary Xavier Becerra on Senate Passage of the Inflation Reduction Act. https://www.hhs.gov/about/news/2022/08/07/statement-by-hhs-secretary-xavier-becerra-on-senate-passage-of-the-inflation-reduction-act.html. Published Aug. 7, 2022. Accessed Aug. 8, 2022.
- Statement by President Biden on Senate Passage of the Inflation Reduction Act. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/07/statement-by-president-biden-on-senate-passage-of-the-inflation-reduction-act/. Published Aug. 7, 2022. Accessed Aug. 8, 2022.
Perspective
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The new climate, health care and deficit reduction bill just passed by the Senate may represent the best outcome the biopharma industry reasonably could have hoped for.
The provision extending the enhanced subsidies for Affordable Care Act insurance is a plus for biopharma, in that it increases the population with medical care.
The provisions that limit prescription drug prices are less severe than might have been expected, at a time when so many senators and representatives are eager to respond to strong public opinion that prescription prices are too high. Yes, the bill includes, for the first time, authorization for Medicare to negotiate the prices of prescription drugs, but only on a handful of the most expensive agents. The bill includes a penalty if a prescription drug’s price is raised above the rate of inflation, but that limit does not apply outside of Medicare. The cap on out-of-pocket insulin costs, at $35 per month, also applies only within Medicare coverage.
These measures, by themselves, will have limited impact on biopharma, and contrary to some of the heated rhetoric, are not going to destroy innovation in developing new medicines. The real question is whether a precedent has now been set that will lead to Medicare negotiation on a broader range of prescription drugs. With the current consensus that Republicans are likely to control the House after the midterms, it seems unlikely that the scope of Medicare negotiations will be widened in the immediate future.
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