Inflation Reduction Act having an immediate impact on drug prices
Medicare is one of the biggest winners of the Inflation Reduction Act, being granted powers to negotiate drug prices for the first time in history.
But with that new responsibility comes a significant learning curve, one that includes hiring people who know better the ins and outs of the drug industry.
Chiquite Brooks-LaSure, administrator of the Centers for Medicare and Medicaid Services (CMS), acknowledged the complexities in an interview with Yahoo Finance Monday.
"Drug costs and how we actually pay for them are really complicated," she said.
Brooks-LaSure said the agency will need to fill new positions in order to take on the task and will lean on the expertise of other agencies like the U.S. Department of Veterans Affairs, which already negotiates with drug manufacturers.
"We really want to look the outside as well," Brooks-LaSure said.
The agency has been tasked with negotiating the price of 10 of the most expensive single source drugs — but within the text of the new law is a mountain of caveats, which includes excluding orphan drugs, looking at prices before assistance programs and discounts are put into effect.
"How do we make sure that drug costs are lowered for people and also for the government? … That is going to be a process that we will engage with a variety of stakeholders to make sure that we move in a better direction," Brooks-LaSure said.
Already, analysts and experts have pointed to the potential for a negative impact to broader drug pricing overall, as manufacturers look to make up for the controls put in place by the federal government. There is also a potential to find legal loopholes.
In addition to drug pricing, the legislation also capped insulin costs at $35, which some manufacturers have already implemented for some products or demographics.
All told, between out-of-pocket costs being capped and guaranteed access or pricing for some drugs, the legislation has some immediate impact. But the longer term negotiation process, set to take effect in 2026 for 10 drugs and increase annually to reach 20 drugs, still has to be finessed.
"The legislation makes clear that people are going to benefit from those discounts," Brooks-LaSure said, adding, "The way drug costs are being paid in our country is not sustainable. It's not one entity's fault or problem; it something we need to look holistically about how we look at it," she added.
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