Medicare Part D Restructure Gives CMS the Ability to Negotiate Drug Prices

May 18, 2023 by Alec Stone MA, MPA, Former ONS Director of Government Affairs and Advocacy

Now, Medicare will have the power to do what so many Democrats and Republicans in the past talked about doing: lower prescription drug prices (https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/09/13/remarks-by-president-biden-on-the-passage-of-h-r-5376-the-inflation-reduction-act-of-2022/). And seniors will see their out-of-pocket cost for their prescription drugs limited to $2,000 a year, no matter how high their drug prices are.

President Joe Biden, September 13, 2022

Health care consumes an inordinate amount of the U.S. gross domestic product at 18.3%. In 2021, healthcare spending increased (https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountshistorical#:~:text=The%20data%20are%20presented%20by,spending%20accounted%20for%2018.3%20percent) by 2.7% to $4.3 trillion, equating to $12,914 per person annually. Under that average, prescription medications are the highest expenditure. According to the Centers for Medicare and Medicaid Services (CMS) (https://www.cms.gov/files/document/highlights.pdf), “Retail prescription drug spending increased 7.8% to $378.0 billion in 2021, a faster rate than in 2020 when spending increased by 3.7%. The acceleration in growth was due to an increase in the use of prescription drugs in 2021.” On top of that staggering national economic impact are the personal, emotional, and familial burdens that take a toll on patients and caregivers.

For years, the U.S. Congress has fought for bipartisan legislation to find ways to cut costs and bureaucracy for more Americans to access affordable health care. But it is the regulatory agencies, like CMS, that are charged with interpreting and implementing those congressional laws’ intent. Agencies constantly review and distribute complex federal agency analyses, seeking expert opinion on how a pending regulation would impact consumers—patients, providers, clinicians, hospitals, clinics, and others in the healthcare sector.

What Is Medicare Part D?

Myriad federal government entitlement programs guarantee certain benefits to certain population segments based on a calculus of predetermined qualities. Medicare is one of the largest, and CMS auspices break it down into several parts.

Medicare Part D is the agency’s optional outpatient, prescription drug program for those who qualify, and costs and coverage vary from the different offered plans. The federal government negotiates drug prices through insurance companies, and then allows people to purchase additional plans for healthcare options. Currently, 49 million people are enrolled (https://www.kff.org/medicare/fact-sheet/an-overview-of-the-medicare-part-d-prescription-drug-benefit/) in Medicare Part D.

Aging aggravates many health conditions, and Medicare beneficiaries may require substantially more medications to maintain their quality of life than younger Americans. Medicare, including Part D, is so critical for constituents that almost every elected official safeguards its governmental benefits against their own political peril.

New Legislation Will Restructure Medicare Part D

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law. With popular support to reform Medicare Part D, the bill limits patient out-of-pocket costs, allows the federal government to negotiate prescription medication prices, and expands benefits for low-income subsidy programs. Estimates suggest that the cost savings will reduce the federal deficit by $237 billion (https://www.cbo.gov/system/files/2022-09/PL117-169_9-7-22.pdf) over the next decade. But more than that, people who are on limited budgets will have a better understanding of their own costs associated with their prescription medications (https://voice.ons.org/news-and-views/the-oncology-nurses-role-in-oral-anticancer-therapies#:~:text=Pharmacy%E2%80%99s%20Role%20in%20Improving%20Access%20and%20Reducing%20Financial%20Toxicity).

Many of IRA’s Medicare provisions will take effect in phases over the next several years, smoothing the edges of what is considered an antiquated federal program in need of revisions. Several IRA elements have a direct impact on allocations for services (https://www.congress.gov/bill/117th-congress/house-bill/5376) patients often require during their cancer journey:

ONS Perspective: No Shortcuts for a Longstanding Problem

Bipartisan understanding of patient financial toxicity has grown tremendously during the past decade. The parts of IRA that resonate with a majority of Americans across party ideology curtail unknown, unexpected, and unwieldy costs, answering public opinion polling demands for change (https://www.dataforprogress.org/blog/2021/6/17/support-for-lowering-drug-prices-is-bipartisan-among-voters-democrats-must-listen). Building on that bipartisan support, join ONS and its oncology nurse advocates in promoting health policy initiatives that reflect the views of so many. It’s a priority for the system to survive.


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