On Wednesday July 27, 2022, Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) reached a deal on The Inflation Reduction Act of 2022, which proposes to raise $739 billion in revenue to be invested in climate change and healthcare initiatives as well as reduce the deficit. Senate Democrats hope to vote on the bill this week, ahead of the August recess. Once the Senate Parliamentarian determines which provisions of the Act pass muster to be included in the reconciliation process, the bill will head to the Senate floor and require a simple majority to pass before moving on to the House of Representatives.

Prescription Drug Pricing Reform

The bill would require the Secretary of HHS to establish a Drug Price Negotiation Program. Under the Program, the Secretary would be required to publish a list of selected drugs, enter into agreements with manufacturers of those drugs, and then negotiate and re-negotiate as necessary maximum fair prices. The list, which would be established in part by ranking drugs according to their total expenditures, would include 10 negotiation-eligible drugs in 2026, 15 drugs in 2027 and 2028, and 20 drugs in 2029. This requirement that the Secretary establish and execute the Program differs from a prior House version of the bill, which afforded the Secretary more discretion in choosing to negotiate fewer than the maximum number of drugs.

The bill also proposes to cap Medicare patients’ out of pocket costs at $2,000 per year, with the option to break that amount into monthly payment installments. The bill would hold Medicare part D annual premium growth to existing levels and expand the population of Part D patients who are eligible for premium and co-pay assistance on prescription drugs. Lastly, the bill would require drug companies to rebate the difference to Medicare if they raise prices higher than the rate of inflation.

The bill did not include specific provisions related to insulin pricing. However, Senate Majority Leader Schumer has indicated that Democrats are hoping to add some type of insulin affordability language to the bill before it heads to the Senate floor for a vote.

Extension of ACA Subsidies

In 2021, the American Rescue Plan expanded Affordable Care Act premium tax credits to 400% of the federal poverty line, allowing individuals who purchased insurance under the program to not pay more than 8.5% of their income on coverage. This expansion was set to expire at the end of this year; the Inflation Reduction Act would extend that deadline to 2025.

The summary of the bill can be found here, as well as the full text of the bill here.