The IRA Prescription Drug Negotiation Program generated estimated savings of $12 billion in Medicare costs for 15 medications. The Maximum Fair Prices (MFP) applied for 2024 showed expected savings of $12.5 billion, with prices 44% lower than pre-IRA prices. The largest savings come from medications with fewer prior discounts.
The tax code allows for a detailed medical deduction (IMD) that subtracts certain medical expenses from taxable income; however, it currently benefits a small fraction of the population. Reforming the IMD could expand its reach, but lawmakers must consider other options to address the financial risks of health decline. The IMD has been modified since 1942 and still represents a significant portion of medical spending. It is more beneficial for taxpayers over 65 years old.
Federal lawmakers use inflation rebates to lower drug prices, forcing pharmaceutical companies to pay when prices rise faster than inflation. These rebates do not apply to drugs sold to patients with commercial insurance, but states could impose their own requirements to fill this gap, avoiding legal challenges.
Loren Adler and Matthew Fiedler submitted comments to the Centers for Medicare and Medicaid Services on a site-neutral payment proposal for medication administration services under the OPPS rule. They argue that this would reduce costs for Medicare, eliminate incentives for vertical consolidation, and not affect patient care. They suggest expanding these payments to other services and setting more precise rates to better align with the Physician Fee Schedule.
The Inflation Reduction Act allows the federal government to negotiate drug prices with Medicare, improving benefits and limiting price increases. It generates debate about the impact on innovation, with possible increases in post-IRA R&D activity, according to research. Authors: Richard G. Frank and Ben Graham.
