In July 2024, the Centers for Medicare & Medicaid Services (CMS), under the Department of Health and Human Services (HHS), released updated guidelines under the Medicare Prescription Payment Plan. This initiative is a key element of the Inflation Reduction Act, aimed at reducing the financial burden of prescription drugs for Medicare beneficiaries. One notable feature of the new plan is the reduction in Part B coinsurance rates for 64 medications, effective from July 1 to September 30, 2024. These drugs, which treat conditions like cancer, osteoporosis, and infections, had their prices raised faster than the rate of inflation, prompting CMS to lower costs for over 750,000 Medicare users.
Key Features of the Medicare Prescription Payment Plan
A significant change starting in 2025 will allow Medicare beneficiaries to spread out the cost of prescription drugs over the calendar year instead of paying the full amount at the pharmacy. This is especially beneficial for people with high-cost prescriptions, allowing for greater financial flexibility. Patients must opt into the Medicare Prescription Payment Plan, which aligns with the upcoming $2,000 cap on annual out-of-pocket drug expenses. This combination will offer significant financial protection to individuals with Medicare Part D coverage, easing the burden of expensive treatments.
The plan also introduces a reduced coinsurance rate for certain drugs under Medicare Part B, targeting medications whose prices have risen faster than inflation. Between July and September 2024, 64 drugs, used to treat conditions such as osteoporosis and cancer, will have a lower Part B coinsurance rate, benefitting over 750,000 people.
Enhanced Benefits under the Inflation Reduction Act
The IRA has already delivered several key benefits aimed at reducing prescription drug costs for Medicare beneficiaries:
Insulin Cost Cap: Out-of-pocket costs for a month's supply of insulin are now capped at $35.
Free Vaccines: Advisory Committee on Immunization Practices (ACIP)-recommended vaccines are available at no cost to those with Medicare prescription drug coverage. In 2023 alone, over 10 million Medicare Part D users received vaccines.
Expanded Eligibility for Extra Help: This low-income subsidy under Medicare Part D offers prescription drug coverage with no deductibles, premiums, and lower copayments for eligible individuals. In 2024, out-of-pocket costs are capped at around $3,500 for high-cost drugs, and in 2025, this cap will be lowered to $2,000.
How This Helps the Rare Disease Community
For individuals with rare diseases, who often face disproportionately high medication costs, the Medicare Prescription Payment Plan and the Inflation Reduction Act’s provisions offers an opportunity for some much-needed relief. Many rare disease treatments are categorized as specialty drugs, which are often expensive and not easily replaced by generics. Medicare Part D helps cover these specialty drugs, and the out-of-pocket spending caps further reduce the financial strain for patients who require ongoing, costly treatments.
Key benefits for the rare disease community include:
Lower Out-of-Pocket Costs: The $2,000 annual out-of-pocket cap and catastrophic coverage help manage the high costs of orphan drugs. With the introduction of an annual out-of-pocket spending cap, patients can avoid overwhelming expenses after reaching the limit, crucial for those requiring long-term therapies.
Access to Orphan Drugs: Medicare Part D ensures that rare disease patients can access essential, often expensive, orphan drugs, with almost 80% of such drugs covered under the plan.
Low-Income Subsidies: Many rare disease patients who may be unable to work due to their condition can qualify for reduced medication costs through LIS (Extra Help).
Specialty Drug Coverage: Expensive specialty drugs are often covered under Medicare's higher tiers, making them more accessible to patients.
The out-of-pocket cap under the Inflation Reduction Act, set to fully take effect in 2025, will offer even greater relief for rare disease patients, whose treatments often come with exceptionally high annual costs. By spreading costs across the year and capping out-of-pocket expenses, the Medicare Prescription Payment Plan provides a vital lifeline for patients in need of costly, long-term care.
Supporting Examples of Cost Savings
Medications like Padcev, used for advanced bladder cancer, and Crysvita, which treats a rare genetic disorder (XLH), have benefitted from the inflation rebate program, allowing patients to save thousands of dollars. Under the Medicare Prescription Drug Inflation Rebate Program, these drugs, which saw price increases faster than inflation, became more affordable for seniors and other beneficiaries. These rebates aim to keep drug prices manageable for Medicare beneficiaries, with examples like Padcev, a drug for bladder cancer, which saved some beneficiaries up to $1,181 from April 2023 to March 2024. Crysvita, used to treat the rare disorder X-linked hypophosphatemia (XLH), offered savings of up to $765 in the same period.
Public Education and Outreach by CMS
CMS is spearheading an outreach initiative to ensure that Medicare beneficiaries, including those with rare diseases, understand these new benefits. This effort is expected to help over 3 million eligible individuals who have yet to enroll in programs like Extra Help and encourage more widespread use of the Medicare Prescription Payment Plan.
Conclusion
The new Medicare guidelines under the Inflation Reduction Act represent a major step forward in reducing prescription drug costs, offering financial relief to millions of Americans, including the rare disease community. With out-of-pocket caps, extended subsidies, and targeted efforts to keep drug prices in check, the Medicare Prescription Payment Plan is set to improve access to life-saving medications while alleviating financial stress for beneficiaries across the country.
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