Litchfield Insurance Associates 
May 2023 Newsletter

Effective Date

Negotiated prices for the first set of selected drugs covered under Part D will be available in 2026. For drugs covered under Part B, the first year negotiated prices will be available is 2028.

Who is Affected?

The provision to allow the federal government to negotiate drug prices will put downward pressure on both Part D premiums and out-of-pocket drug costs.   The number of Medicare beneficiaries who will see lower out-of-pocket drug costs in any given year under the drug price negotiation program and the magnitude of savings will depend on how many and which drugs are subject to the negotiation process and the price reductions achieved through the negotiations process relative to what prices would otherwise be.

Budgetary Impact

CBO (Congressional Budget Office) estimates $98.5 billion in Medicare savings over 10 years (2022-2031) from the drug negotiation provisions in the Inflation Reduction Act.  CBO estimates that the drug pricing provisions in the Inflation Reduction Act, including but not limited to the new Medicare drug price negotiation program, will have a very modest impact on the number of new drugs coming to market in the U.S. over the next 30 years: 13 fewer out of 1,300, or a reduction of 1% (about 1 fewer drug over the 2023-2032 period, about 5 fewer drugs in the subsequent decade, and about 7 fewer drugs in the decade after that).
 

Cap Out-of-Pocket Costs  for Medicare Part D Enrollees

Medicare Part D currently provides catastrophic coverage for high out-of-pocket drug costs, but there is no limit on the total amount that beneficiaries pay out of pocket each year. Under the current benefit design, Part D enrollees qualify for catastrophic coverage when the amount that they pay out of pocket plus the value of the manufacturer discount on the price of brand-name drugs in the coverage gap phase exceeds a certain threshold amount. Enrollees with drug costs high enough to exceed the catastrophic threshold are required to pay 5% of their total drug costs above the threshold until the end of the year unless they qualify for Part D Low-Income Subsidies (LIS). In 2022, the catastrophic threshold is set at $7,050, and beneficiaries pay about $3,000 out of pocket for brand-name drugs before reaching the catastrophic coverage phase.Under the current structure of Part D, there are multiple phases, including a deductible, an initial coverage phase, a coverage gap phase, and the catastrophic phase.

During the coverage gap benefit phase, enrollees pay 25% of drug costs for both brand-name and generic drugs; plan sponsors pay 5% for brands and 75% for generics; and drug manufacturers provide a 70% price discount on brands (there is no discount on generics). Under the current benefit design, beneficiaries can face different cost-sharing amounts for the same medication depending on which phase of the benefit they are in, and can face significant out-of-pocket costs for high-priced drugs because of coinsurance requirements and no hard out-of-pocket cap.

Litchfield Insurance Agency would be happy to help you check on your drug pricing and any changes to your prescriptions!

Demand is mounting for Mounjaro a new weight loss drug that has yet to be approved by the Food & Drug Administration.

• 1 Pound large rigatoni
• Kosher Salt
• 2 teaspoons extra-virgin olive oil
• 4 ounces guanicale (or pancetta or smoked bacon) cut into 2-inch matchsticks
• 1 small yellow onion
• 1 pound Italian sausages (either sweet or hot), casings removed
• 2 tablespoons tomato paste
• 3 cups cherry tomatoes
• 1 cup red wine
• 4 egg yolks
• 1/2 cup Pecorino Romano (grated)
• 1 teaspoon cracked black pepper