Medicare is gaining the power to negotiate prices for certain drugs and punish pharmaceutical companies that don’t play by the rules.
The legislation represents a historic expansion of Medicare’s power that was fiercely opposed by the pharmaceutical industry.
But the negotiation powers are limited in scope, and some lawmakers argue that legislation doesn’t go far enough.
Timeline for negotiations
Under the legislation, the HHS can negotiate prices for some of the most expensive drugs covered under Medicare Part B and Medicare Part D. The former covers specialized drugs administered by health-care providers, while the latter covers drugs that are filled at retail pharmacies.
The program is phased in through four stages over several years. Here’s how it works:
• Phase 1: HHS negotiates 10 Medicare Part D drugs. Prices take effect in 2026.
• Phase 2: HHS negotiates 15 Part D drugs. Prices take effect in 2027.
• Phase 3: HHS can negotiate 15 Medicare Part B or D drugs. Prices take effect in 2028.
• Phase 4: HHS negotiates 20 Part B or D drugs. Prices take effect in 2029. The secretary can negotiate 20 drugs in all subsequent years.
How many seniors will benefit from the negotiations depends in large part on which drugs the HHS secretary decides to target. More than 63 million Americans are insured through Medicare overall and about 49 million are enrolled in Medicare Part D.
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