Biden Stated Medicare Drug Worth Negotiations Lower the Deficit by $160B. That is Years Away.

March 21, 2024

88

[ad_1]

Amy Sherman, PolitiFact

We minimize the federal deficit by $160 billion as a result of Medicare will not must pay these exorbitant costs to Large Pharma.

President Joe Biden in his State of the Union handle, March 7, 2024

President Joe Biden has been making his case for reelection to voters by telling them he’s good for his or her pocketbooks, together with on the pharmacy counter.

Throughout his State of the Union handle, Biden mentioned laws he signed gave Medicare the ability to barter decrease prescription drug costs.

“That’s not simply saving seniors cash and taxpayers cash,” Biden mentioned, a reference to the Inflation Discount Act, which handed in 2022. “We minimize the federal deficit by $160 billion as a result of Medicare will not must pay these exorbitant costs to Large Pharma.”

Biden added, “This yr, Medicare is negotiating decrease costs for a number of the costliest medication.” He referred to as for giving Medicare the ability to barter costs for 500 medication over the following decade.

In August, the federal authorities introduced the primary 10 medication that it’s going to negotiate for decrease costs as a part of the Inflation Discount Act. A revered supply of laws evaluation tasks the change will save the federal government some huge cash, however these {dollars} haven’t been realized.

There’s a cause Biden touted this laws throughout his handle: Polling by KFF reveals that folks, no matter their political leanings, overwhelmingly assist the thought of permitting Medicare to barter drug costs. However most individuals don’t know that such negotiations are underway.

Impression of Inflation Discount Act Will Take Many Years

In August 2022, Biden signed the Inflation Discount Act, which can enable the federal authorities to barter costs with drugmakers for Medicare. Biden stored his promise to repeal the legislation that barred Medicare from negotiating costs.

The nonpartisan Congressional Funds Workplace tasks a 10-year cumulative financial savings of $161.7 billion from two provisions of the Iaw: a phased-in effort to barter with drugmakers for decrease costs and a rebate for value will increase above the general inflation fee. (The White Home has beforehand pointed to this evaluation.)

Nevertheless, not all of the financial savings will probably be everlasting. About $44.3 billion over 10 years will probably be funneled into associated provisions that broaden entry and decrease out-of-pocket prices for Medicare beneficiaries.

“Negotiations are nonetheless ramping up, so the financial savings generated by the Inflation Discount Act negotiation provisions are nonetheless sooner or later,” mentioned Matthew Fiedler, a Brookings Establishment knowledgeable on the economic system and well being research. “The Congressional Funds Workplace did anticipate the inflation rebate provisions of the IRA (that are encompassed within the $160 billion) to start producing modest financial savings throughout 2023 and 2024, however there, too, a lot of the financial savings are sooner or later.”

The laws includes value negotiations for 10 brand-name drugs that lack generic equivalents. These medication embody the blood thinners Eliquis and Xarelto; the diabetes medication Januvia, Jardiance, and NovoLog; Enbrel, for rheumatoid arthritis; the blood-cancer drug Imbruvica; Entresto, for coronary heart failure; Stelara, for psoriasis and Crohn’s illness; and Farxiga, a drug for diabetes, coronary heart failure, and power kidney illness.

The CBO has estimated that the negotiated costs will translate to just about $100 billion in federal financial savings from 2026 to 2031.

“Biden is leaping the gun on claiming financial savings for seniors,” mentioned Joe Antos, an knowledgeable on well being care on the conservative American Enterprise Institute. “Worth negotiations haven’t been accomplished; the brand new costs for chosen medication aren’t in place till 2026.”

Biden mentioned the laws is “saving seniors cash and taxpayers cash,” which could possibly be interpreted to imply it’s saving them cash now on pharmaceuticals. However the negotiations for these medication would outline the costs to be paid for prescriptions beginning in 2026. For 2027 and 2028, 15 extra medication per yr will probably be chosen for value negotiations. Beginning in 2029, 20 extra will probably be chosen a yr.

That mentioned, different provisions within the laws have already led to financial savings for seniors, mentioned Tricia Neuman, a senior vp at KFF:

Sure beneficial grownup vaccines lined beneath Medicare Half D, corresponding to shingles, are lined without charge.
The act established a cap on Half D spending that begins phasing on this yr. This yr, Half D enrollees pays not more than $3,300 on brand-name medication. In 2025, the cap for all lined Half D medication drops to $2,000.
The Inflation Discount Act included the $35-a-month insulin cap, enhancements in protection for low-income beneficiaries, and the inflation rebate.

Once we pressed the White Home to offer examples of financial savings which have already occurred, a spokesperson pointed to the insulin cap.

In the meantime, Antos mentioned that though the Half D rebate has kicked in, the financial savings come from a small subset of Half D medication taken by older Individuals and that the federal government reaps the financial savings, not older Individuals.

“There isn’t a cause to anticipate that seniors will see important financial savings since there’s no obligation for the feds to distribute financial savings to Half D enrollees,” Antos mentioned.

Our Ruling

Biden mentioned, “We minimize the federal deficit by $160 billion as a result of Medicare will not must pay these exorbitant costs to Large Pharma.”

Biden’s assertion omits the timeframe; the financial savings haven’t been realized. The CBO projected 10-year cumulative financial savings of $161.7 billion from two provisions of the laws. And as for saving older Individuals cash on their prescriptions, that hasn’t occurred but. The federal authorities is negotiating the primary 10 medication with the brand new costs set to take impact in 2026.

We fee this assertion Half True.