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New law will drop drug prices for older residents, but savings will come over time

For hard-pressed seniors, ‘the talk is about the cost of medicines’

Sandra Harris, the volunteer president of AARP Massachusetts, said, “When you get people my age around a table, the talk is about the cost of medicines.”Jonathan Wiggs/Globe Staff

Retired interior designer Sandra Harris is the volunteer president of AARP Massachusetts, the advocacy group for seniors. She’s also a 71-year-old woman who, like tens of thousands of older residents in the state, spends more than $2,000 a year, after insurance, for prescription drugs ranging from blood thinners to meds that prevent strokes.

“I just picked up one prescription yesterday and my out-of-pocket cost was $289,” said Harris, who lives in Boston’s South End. “When you get people my age around a table, the talk is about the cost of medicines.”

The massive climate, health, and tax bill that President Biden signed into law Tuesday promises long-sought relief for the more than 63 million older Americans insured by Medicare. But while some savings will come sooner, notably the $35 monthly cap on insulin costs taking effect next year, the largest benefits from the bill are still two to four years away.

Out-of-pocket drug costs for Medicare-insured seniors will be capped at $2,000, but not until 2024, giving Medicare and the health plans that provide supplemental coverage time to adjust their billing and payment systems. And savings from Medicare’s first-ever negotiations with drug makers over the prices of 10 of the most expensive medicines — the most highly publicized and contentious benefit from the bill — won’t be seen until 2026, though preparations for the bargaining will start next year.


Despite those administrative lags, the new law, dubbed the Inflation Reduction Act, will be “game-changing” for older folks burdened by the ever-rising cost of meds when it finally takes effect, said Rena Conti, health economist at Boston University’s Questrom School of Business. “There will be sizable savings for all Medicare beneficiaries, whether they take these drugs or not.”

One reason is because the new law will prevent drug companies from boosting prices on medicines — even less expensive ones that won’t be part of Medicare price haggling — beyond the annual rate of inflation. Companies that do will be required to pay rebates, starting this year. As a result, all Medicare recipients, whose premiums have climbed steadily in recent years, could see decreases in the coming years, Conti said.


The Congressional Budget Office, which analyzes the budget impact of spending bills, estimated prescription drug provisions in the new law will trim the federal deficit by $288 billion over the next decade.

“As a package, the legislation represents a big step forward in Medicare’s ability to control its spending on prescription drugs,” said Juliette Cubanski, deputy director of the Medicare policy program at the Kaiser Family Foundation, a nonprofit focusing on health issues.

The biggest winners will be seniors whose out-of-pocket costs — the portion of claims not covered by Medicare or supplemental insurance — top $2,000 a year for drugs purchased at pharmacies. Kaiser estimates there were more than 1.4 million people in that category nationally in 2020, including more than 25,000 in Massachusetts.

Margaret Ensley of Boston’s Hyde Park, is among those who should get substantial relief from the cap. Ensley, a retired nursing assistant in her 80s, said her doctors have prescribed 15 prescription drugs for her daily use to treat everything from diabetes to hypertension to chronic pain. But she doesn’t always have enough money to follow the plan.

“I will skip some of them [medicines],” Ensley admitted. “I have bills I have to pay. I have a house that needs gas and electricity.”


Maryland resident David Mitchell, the 72-year-old founder of the advocacy group Patients for Affordable Drugs, says he pays more than $16,000 a year out of pocket for Pomalyst, just one of the combination of drugs he takes to treat his rare blood cancer. “This bill is going to make a real difference in the lives of millions of Americans,” he said.

Advocates have pushed to rein in drug prices since 2003, when Congress passed the law creating the Medicare drug benefit, called Part D. Recognizing the market power of Medicare, the nation’s largest health insurer, the pharmaceutical industry successfully lobbied for a “non-interference” clause in the legislation, effectively preventing Medicare from directly negotiating drug prices as commercial insurers do.

Since then, the pharmaceutical industry has fended off multiple legislative efforts, some of them bipartisan, to eliminate that clause. In the past two years alone, the industry has spent more than $205 million lobbying against allowing Medicare to negotiate with drug makers and other provisions in the new law, according to a report released Tuesday by Accountable.US, a watchdog group. “We’ve been fighting this war for 20 years,” said Mike Festa, director of AARP Massachusetts.

After the president signed the new law, the Pharmaceutical Research and Manufacturers of America, the lobbying group known as PhRMA, warned its “partisan set of policies” will give government the power to set drug prices, dampening incentives for funding research and innovation.


The new law “will lead to fewer new treatments and doesn’t do nearly enough to address the real affordability problems facing patients at the pharmacy,” PhRMA chief executive Stephen Ubl said in a statement. “We will explore every opportunity to mitigate the harmful impacts from the unprecedented government price setting system being put in place.”

But the measures opposed by the industry have broad public support. Placing caps on prescription drug price increases is the single most popular provision of the new law, with 76 percent approval nationally, according to a Politico/Morning Consult poll posted Wednesday.

Under the new law, Medicare’s negotiations with companies will start with 10 of the most costly drugs in the first year and increase to at least 20 by the end of the decade. Medicare hasn’t yet identified the drugs on which it will negotiate prices. “The bill is targeting a specific group of drugs that are expensive, have no competition, and have been on the market for many years,” said Cubanski at Kaiser. “All of us are just one scary diagnosis away from needing these expensive medications.”

Still, the partisan divide in Washington means the next Congress, or the next president, could mount a push to repeal the provisions to reduce drug prices, similar to the years-long effort to repeal the Affordable Care Act known as Obamacare. While earlier efforts to control drug prices were bipartisan — and former president Donald Trump called for allowing Medicare to negotiate with drug makers — the law Biden signed this week was passed along party lines with no Republican support.


But those who advocated for the new law said it’s likely to be difficult to reverse a measure that provides financial relief for older folks.

“If the Republicans are going to tell the American people they want to repeal this law that’s lowering their drug prices, that would be a very stupid thing to do politically,” said Mitchell.

Robert Weisman can be reached at robert.weisman@globe.com.