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Hi. I’m Connie. As a serial “Grandmapreneur®”, I speak to retirees or soon-to-be retirees on the benefits of pursuing entrepreneurship in retirement. This blog post will help entrepreneurs understand the drug price reform, which you will need as you consider starting a business.

What Is Drug Price Reform?

Prescription drugs in America are way more expensive than those in other countries. This makes prescription drugs more difficult to access, which affects a lot of people. Fortunately, Congress enacted a drug price reform as part of the Inflation Reduction Act of 2022.

The law involves the most change to prescription drug pricing since Medicare introduced outpatient prescription drug coverage in 2003. 

What Exactly Is Changing About Drug Prices?

Due to the drug price reform, the federal health secretary can directly negotiate the prices of certain expensive drugs each year for Medicare. 

This begins with 10 drugs in 2026. It’ll then increase to 20 drugs by 2029. To qualify for the drug price reform, the drugs should be on the market for several years.

In addition, people with Medicare won’t have to shell out over$2,000 each year for prescription drugs. This will make a big difference for seniors with certain conditions like multiple sclerosis and cancer. This will begin in 2025.

Who Will Benefit Most From the Drug Pricing Bill?

Eventually, Medicare beneficiaries ages 65 and up will benefit the most from the drug price reform. In particular, four kinds of Medicare beneficiaries will benefit from it, including the following:

1. Enrollees With High Drug Costs

By 2025, the policy will cap Medicare enrollees’ annual out-of-pocket medicine costs at $2,000. 

According to experts, around 1.4 million people with traditional Medicare benefits spent at least $2,000 in 2020. This means that 1.4 million will likely benefit from the reform. 

2. Insulin Users

Starting next year, the policy will require Medicare plans to limit insulin’s price to $35 each month. 

This is great news since approximately 25% of Medicare patients paid over $35 each month for insulin in 2021. In particular, diabetics will benefit from the price cap. 

3. Enrollees With Current Prescriptions

The drug price reform makes drug prices more predictable for Medicare enrollees who currently taking pharmaceutical drugs on the market. It’s because the act penalizes firms that increase drug prices faster than the rate of inflation.

The penalties started on October 2022 for pharmacy drugs. On January 2023, the policy will apply to drugs administered at doctors’ offices.

While it’s difficult to predict the future of drug prices, the drug price reform protects Medicare patients from sudden spikes and inflation during retirement.

Conclusion

For the first time, a clear policy that benefits Medicare patients the most has been passed. With the drug price reform, Medicare enrollees and retirees can enjoy lower prescription drug prices.

Disclaimer: The material and information contained in this article are for general information purposes only. You should check with a financial advisor before making any business, legal, or other decisions.

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