Multiple sclerosis was a blow in the life of Therese Humphrey Ball. She had to deal with the disease – and the cost of her treatment.
Symptoms like loss of vision and weakness in her legs forced the 68-year-old former nurse from Indiana into early retirement, and high drug costs forced her out of her beautiful apartment.
“The worst was for the first two months, no heat,” Humphrey Ball said. “It was like something you never thought you would live in.”
But she felt she had no other options. Humphrey Ball had successfully treated his MS for eight years with the drug Copaxone. But the drug cost $6,000 a month, more than his monthly income.
Teva Pharmaceuticals, the maker of Copaxone, increased the price 27 times in 25 years. The drug now costs about $7,000 a month, 10 times what it cost when it was launched in 1997.
Humphrey Ball had to ration himself and eventually stop Copaxone for several months.
“You can’t imagine how crazy I was,” she said, “…to think that in the United States of America people have to do this. It’s not correct.”
Humphrey Ball channeled that anger by testifying on Zoom before Congress in May 2021.
“I can’t control my disease or change that I have MS, but telling you my story and advocating for lower prices is something I can control,” she told lawmakers.
Policymakers have listened: Part of the Cut Inflation Act passed in August limits out-of-pocket costs for seniors who receive Medicare prescription drug coverage known as Part D.
Increase senior access and cost savings
Federal Medicare program for older Americans reaches historic milestone: Beginning in 2025, the 48 million older people Program participants won’t have to spend more than $2,000 of their own money on prescription drugs each year. Currently, there are no spending limits, forcing some seniors who rely on expensive drugs to empty their savings and retirement accounts to pay for their drugs.
The new limit is about 1.4 million older Americans who spend more than that annually.
The IRA’s ambitious goal is to reduce costs for seniors and the Medicare program as a whole, while increasing cost share for insurance companies and drugmakers.
New benefit shifts responsibility to drugmakers and insurers
The Medicare prescription drug benefit overhaul is an attempt to reduce the burden on patients and Medicare costs while increasing the amount insurers and drug manufacturers are responsible for Part D drugs. Medicare is a federal program, the elderly are covered by private insurers.
Under the current design, Medicare spent $52 billionor nearly half of all Part D dollars, roughly 2% of beneficiaries who take expensive drugs.
“It really boils down to a basic problem with the original design of the D-part advantage,” said Juliette Cubanski, deputy director of health insurance policy for the Kaiser Family Foundation. “For patients and for the Medicare program, the risk is completely open.”
Much of the risk rebalancing from 2025 will occur after patients reach that $2,000 spending threshold. The new benefit cuts Medicare program costs to 20% from 80% previously. Meanwhile, drugmakers will now be required to give a 20% discount on the list price of drugs. Insurance companies will be responsible for 60% of drug costs, four times their current liability.
This is intended to incentivize insurers to negotiate harder with drugmakers for lower prices.
As insurers’ risk increases, companies will likely turn to other levers to control costs. The new IRA rules limit annual premium increases to 6% per year.
But Cubanski warns that insurers could potentially reduce benefits. Insurers could also limit the list of drugs they cover or monitor more closely, as well as the drugs patients take. This could make it harder for older people to get the drugs they need.
“Overall, Medicare beneficiaries get a much better benefit in terms of out-of-pocket expense exposure,” Cubanski said of Part D’s shift to greater financial liability for insurers.
But she warns older people could also forgo easy access to more types of drugs with no deductible and low premium.
The future challenges of seniors
While the new spending limit is likely to increase costs for insurance companies, it could be a boon for drugmakers.
“Drugmakers love the cap,” Cubanski said. “Making drugs more affordable for patients means they’ll be less likely to skip doses.”
While demand for prescription drugs is expected to rise, the new Part D law includes other provisions to limit drug prices that could limit manufacturers’ revenues. These include giving Medicare the power to negotiate drug prices and penalizing drugmakers for raising prices faster than inflation.
One potential consequence Cubanksi and others are watching is higher introductory prices for new drugs.
While seniors will be shielded from these high prices with the new cap, they could face other challenges, including higher premiums and lower benefits, as insurance companies seek to limit their spending.
Humphrey Ball is counting down the days until 2025, when the new cap begins and she can start taking Copaxone again.
“So that’s what I’m happy about. That’s what I’m looking forward to – knowing that the medicine I need will be there for me and I won’t have to hoard it anymore,” she said.
She looks forward to a sense of predictability, something she has sought since her diagnosis in 2003.
This story is from the Health Policy Podcast Compromisepartner of Public media on side effects. Dan Gorenstein is editor of Tradeoffs, and Alex Olgin is a reporter/producer on the show, which aired this story on October 27, 2022.
Tradeoff’s coverage of issues facing older Americans is supported in part by the SCAN Foundation, which provides a coordinated, easily navigable system of high-quality services for older adults that maintain dignity and independence.