Next year, for the first time, Medicare will be allowed to start negotiating the prices of some prescription drugs. The policy is expected to lower out-of-pocket costs and save the US government almost $100 billion over a decade. It could prove one of the most valuable parts of the Inflation Reduction Act — but it isn’t without flaws. For this effort to succeed as it deserves to, it will eventually need both bigger ambitions and closer attention to detail.
Most seniors get their prescriptions through Medicare Part D, a benefit provided through private plans that contract through the government. Spending is projected to hit $119 billion next year, accounting for almost a third of what the US lays out on retail drugs. When Part D was being designed in the early 2000s, pharmaceutical manufacturers pressed for a “noninterference clause” to stop the program haggling over price. Without it, they argued, innovation would be stifled. Already, some manufacturers are blaming the IRA for stalling or halting drug development plans.