Will Medicare Be Able To Negotiate Lower Drug Prices?

It’s no secret that the cost of prescription drugs has been steadily rising, with prices going up each year for the past two decades. In fact, people in the U.S. pay significantly more than people in other countries for the same drugs, leading many Americans to shop abroad for necessary medications like insulin. In an attempt to keep drug prices under control for seniors, the House of Representatives passed the Elijah E. Cummings Lower Drug Costs Now Act in 2019, which if passed by the Senate will give Medicare the power to negotiate drug prices. The bill has recently been reintroduced in Congress, and President Biden has signaled his support for lowering prescription drug prices for seniors through Medicare negotiation, but so far it is unclear whether it will become law.

The Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3 Bill)

In 2019, the U.S. House of Representatives passed the H.R. 3 bill, which includes a provision that would allow Medicare to directly negotiate drug prices with drugmakers in order to keep prices under control. The bill has been stalled in the Senate since passing in the House, but it has now been reintroduced.

H.R. 3 would:

two hands in black and white shaking with a group of people standing over the hands.

  • Authorize the Secretary of Health and Human Services (HHS) to negotiate directly with drugmakers in the Medicare program in order to lower prices for up to 250 prescription drugs each year.
  • Limit the annual out-of-pocket costs for Medicare beneficiaries to no more than $2,000.
  • Require manufacturers to give the federal government a rebate for any drug prices that increase faster than the rate of inflation. 
  • Establish a top negotiated price for drugs of no more than 120% of the average of 5 other wealthy nations. 
  • Support research and development for new drugs by investing some of the savings into the National Institutes of Health. 

Agreement On The Negotiations

shopping cart on a computer screen.
Drug prices have left many Americans to shop online and abroad, which can be dangerous.

President Biden is supportive of legislation to lower drug prices, bringing the subject up in his speech announcing his American Families Plan. “Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower drug prescription prices,” he said. “Let’s do it now.”

Roughly 93% of Americans agree that Medicare should be able to negotiate with pharmaceutical companies for lower prices. This is not surprising, since some Americans are forced to look for cheaper ways to fill their prescriptions, including shopping for them abroad or buying questionable drugs online; others are being forced to forgo their medications altogether, which can be deadly, especially for older adults. 

As of the writing of this, the bill has yet to pass in the Senate. The Democrats control the Senate by a 50-50 split (with the tie vote given to Vice President Harris), but so far it is unclear if enough Republicans will support the legislation to give it the 60 votes necessary to overcome a legislative filibuster.

Medicare “Step Therapy” To Lower Drug Costs

Prescription medication can be very expensive, and there is no way around it because it is necessary. However, Medicare has a way to make medication more affordable. The step therapy program allows Medicare to negotiate lower prices and help Medicare beneficiaries save money by offering cheaper medication options.

How Does Step Therapy Work?

Step therapy can be added to your prescription drug plan to offer less expensive medication. The plan will not pay for any of the drugs until you have tried the less expensive ones. It is like a trial and error kind of arrangement.

Step Therapy offers people less expensive medicine that can be as effective, before having to buy the expensive one.
Step Therapy offers people less expensive medicine that can be as effective, before having to buy the expensive one.

First you take the generic form of the medicine, and if it does not work, then the doctor prescribes you another medication. If the second medication does not work, then your doctor will prescribe a different medication that works. However, the medicine that works will be expensive.

Medicare will not pay for the expensive drug unless you go through the step therapy. Once they take a glance and see that you did try the generic forms and they did not work, then they will pay. But if you do not follow the procedure, then the medicine may not be covered, and you will have to pay a lot out of pocket for it.

The CMS has announced that they will be offering the step therapy for Medicare Advantage plans starting January 2019. They estimated that Medicare Advantage beneficiaries spend almost $12 billion a year on drugs. Implementing this procedure will hopefully help control spending, and reduce out of pocket costs.

If you have any questions regarding this procedure, contact your doctor and find out if there are any generic forms of your medication. You can decide if this step therapy is right for you, especially if you are looking to save money. If you have questions or are looking for Medicare help, EZ.Insure is there to help. You will speak to your own knowledgeable agents that are trained for your area. We will go over all the different plans and provide you with quotes. You decide what works for you, and it is all free of charge. Start saving, enter your zip code in the bar above, or contact an agent directly by emailing replies@ez.insure or calling 855-220-1144.