The recently enacted Inflation Reduction Act (IRA) includes several provisions aimed at lowering prescription drug prices for those on Medicare and reducing drug spending by the federal government. But these cost reductions for Medicare may lead to employers and their employees paying the price.
With these reforms, the Centers for Medicare and Medicaid (CMS) will finally have the ability to — and will, in fact, be required to — negotiate the price of drugs with pharmaceutical companies, which should lower the cost for both CMS and Medicare beneficiaries. The consequence of not "negotiating" or accepting the CMS price would be the equivalent of a 95% tax on the Manufacturer's Medicare revenue. At the same time, drug makers will be forced to pay rebates to Medicare if drug prices outpace inflation. The new law also caps the cost of insulin at $35 per month for Medicare beneficiaries and total out-of-pocket spending on drugs at $2,000 annually.
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