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Pharmaceutical company Merck sued the federal government over the Inflation Reduction Act provision that allows Medicare to negotiate drug prices — a law that could help millions of older Americans save hundreds of dollars, if not more, on their medical needs.
Beginning in 2026, Medicare will be able to negotiate the price for 10 drugs, to be determined by the government at a later date. That number will continue to grow as the years go on. This provision is one of a handful of rules under the Inflation Reduction Act that will benefit older Americans. Other benefits include capping out-of-pocket costs at $2,000 per year for beneficiaries starting in 2025, and limiting copays for insulin to $35 per month.
Approximately 3.5 million Americans 65 and older had trouble paying for their medicine in 2019, a 2022 study from the U.S. Department of Health and Human Services reported. More than 2 million older Americans did not get the prescriptions they needed as a result.
Healthcare is also one of the more expensive budget items for retirees. A 65-year-old couple who retired in 2022 can expect to spend $315,000 just for healthcare, and not including long-term care, according to a Fidelity Investments annual report—a 5% increase from the year before.
Merck argued in its lawsuit, filed on Tuesday in federal district court in Washington, D.C., that the new law is “tantamount to extortion,” and that it violates the company’s rights under the First and Fifth Amendments to the U.S. Constitution.
Critics disagree. “This is yet another example of an extremely profitable industry going to great lengths to preserve its profits at the expense of a law that takes reasonable measures to rein in the costs of a limited set of drugs that have been on the market for some time,” the Center for Medicare Advocacy said in a statement. “If this suit is successful, it will be bad for Medicare and bad for Medicare beneficiaries.”
Sherrod Brown, a Democratic senator from Ohio, echoed that sentiment. “Big Pharma will stop at nothing to raise prices on Ohio seniors,” he wrote in a tweet. Xavier Becerra, secretary of the Department of Health and Human Services, said in a tweet the law was “already lowering healthcare costs for seniors and people with disabilities.”
No change will be made immediately, but there is concern that over the long haul this case could make its way to the Supreme Court, which is “fairly corporate-friendly,” said Dan Adcock, government relations and policy director at the National Committee to Preserve Social Security and Medicare, a liberal-leaning nonprofit advocacy group. “That could undermine these newly fought and newly won provisions.”
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