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​Deal Struck to Allow Medicare to Negotiate Drug Prices

​AARP has long fought for Rx reforms to help seniors afford life-saving medications​​

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Millions of older Americans may no longer have to choose between paying for food and buying their medicines under an historic agreement struck on Capitol Hill that would allow Medicare to negotiate directly with manufacturers for the price of some prescription drugs. The proposed deal would also penalize drug companies that increase their prices faster than inflation, cap out-of-pocket costs for Part D medications at $2,000 a year and limit cost-sharing for some insulin at $35 a month.

The agreement may be one of the final pieces lawmakers need as they attempt to strike a final deal on the Biden administration's overall Build Back Better legislation, which has been linked to more than a $1 trillion bill to bolster the nation's infrastructure.

“This deal will directly reduce out-of-pocket drug spending for millions of patients,” Senate Majority Leader Chuck Schumer, D-N.Y., said in announcing the agreement on Nov. 2.

Details were still being revealed, but according to Senate Finance Committee Chairman Ron Wyden, D-Ore., Medicare's ability to negotiate prescription drug prices would start in 2025 with up to 10 medications. The penalty for drug companies that raise their prices higher than general inflation would apply to prescriptions in both the Medicare and the commercial markets and begin in 2022. 

“There’s no greater issue affecting the pocketbooks of seniors on Medicare than the ever-increasing costs of prescription drugs," Jo Ann Jenkins, AARP chief executive officer, said in a statement issued soon after the Rx deal was announced. "For decades, seniors have been at the mercy of Big Pharma. Allowing Medicare to finally negotiate drug prices is a big win for seniors. Adding a hard out-of-pocket cap to Part D will provide real relief for seniors with the highest drug costs. Lawmakers must work quickly to turn today’s announcement into a legislative reality that delivers on the promises made to older Americans."

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AARP has been fighting for years for legislation that would curb runaway prescription drug prices so Americans would no longer pay the highest prices for prescription drugs – three times that of other nations.

“AARP members have called and emailed Congress more than 1.5 million times this year, with more than 300,000 emails and 9,000 phone calls into Member offices in the last few days alone," Jenkins said in her statement. Recent polls show that Americans resoundingly support allowing Medicare to negotiate drug prices and other tools to bring costs down. In a recent AARP survey, 87 percent of Democrats and 85 percent of Republicans support such efforts.

AARP will "closely examine the proposal to ensure drug prices and out-of-pocket costs for seniors will finally come down as a result of this deal," Jenkins said in her statement.

Dena Bunis covers Medicare, health care, health policy and Congress. She also writes the “Medicare Made Easy” column for the AARP Bulletin. An award-winning journalist, Bunis spent decades working for metropolitan daily newspapers, including as Washington bureau chief for the Orange County Register and as a health policy and workplace writer for Newsday