Senators unveil compromise to reduce drug costs for seniors

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Iowa Republican Charles Grassley and Oregon Democrat Ron Wyden said the bill would for the first time limit drug copays for people with Medicare’s “Part D” prescription plan , by capping patients’ out-of-pocket costs at $3,100 a year starting in 2022. They’re hoping to soon have it ready for votes on the Senate floor.

It would also require drugmakers to pay a price-hike penalty to Medicare if the cost of their medications goes up faster than inflation. Drugs purchased through a pharmacy as well as those administered in doctors’ offices would be covered by the new inflation rebates.

The bill reflects efforts by lawmakers of both parties to move beyond the rancorous debates over the Obama-era Affordable Care Act and instead try to pass legislation that will lower costs for people with health insurance who can still face big expenses as a result of coverage gaps. Separate legislation to address “surprise medical bills” has already cleared the Senate Health, Education, Labor and Pensions committee.


CBO also projected that Medicare’s inflation rebate would have ripple effects, leading to prescription drug savings for private insurance plans sponsored by employers or purchased directly by consumers.

The senators announced a Thursday vote on the package by the Finance Committee, which oversees Medicare and Medicaid. Grassley is the panel’s chairman, while Wyden serves as the senior Democrat.

“Pharmaceutical companies play a vital role in creating new and innovative medicines that save and improve the quality of millions of American lives, but that doesn’t help Americans who can’t afford them,” Grassley and Wyden said in a joint statement. “This legislation shows that no industry is above accountability.”


Democrats controlling the House want to go farther by granting Medicare legal authority to directly negotiate prices with pharmaceutical companies. Direct negotiations are seen as a nonstarter in the Republican-controlled Senate, but the bill’s drug price inflation penalty may yet find support among Democrats in the House.


The lack of a cap on out-of-pocket costs for Medicare’s popular prescription benefit has left some beneficiaries with bills rivaling a mortgage payment. That’s because with Medicare’s current protection for catastrophic costs, patients taking very expensive drugs are still responsible for 5% of the cost, with no dollar limit on what they pay. For example, 5% of a drug that costs $200,000 a year works out to $10,000.

The Grassley-Wyden bill does not directly address the problem of high launch prices for new medications, but its inflation rebates could put the brakes on price hikes for mainstay drugs such as insulin. The proposed changes are likely to encounter stiff resistance from the drug industry and perhaps pushback from insurers as well. Industry lobbying groups were busy trying to calculate the impact on the bottom line of the bill’s overhaul of Medicare’s pharmacy benefit.

Other provisions of the legislation would:







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