The Inflation Reduction Act: An Overview

Posted at 11:20 PM on Sep 1, 2022


Authors: Jakob Cisco and Lauren Reynolds, President, National Student Advocacy Committee (NSAC). NSAC brings together student advocates across the country to build support for and further Prescription Justice’s legislative and policy agenda to end the crisis of high drug prices. The NSAC authors are proudly responsible for their own content.


The cause of lower drug prices in America gained ground when the Inflation Reduction Act (IRA) of 2022 was signed into law last month. A stripped-down version of the Build Back Better Act, the IRA invests in combating climate change, provides affordable care act subsidies to help people afford health insurance, and helps lower drug prices and patient costs in Medicare.  The Inflation Reduction Act is the first meaningful healthcare legislation since the passage of the Affordable Care Act. While we have a long way to go for prescription justice, at long last we have a law that begins making prescription drugs more affordable within the United States.


The biggest problem with the IRA is that it doesn’t lower drug prices for people outside of Medicare. Senator Bernie Sanders (I-VT) introduced multiple amendments to the bill before the vote in order to expand its reach. These amendments included the ability for Medicare to more quickly negotiate prescription drug prices, an expanded list of prescription drugs that could be subject to negotiation, and access to dental, hearing, oral, and vision care under Medicare. All of these amendments were overwhelmingly struck down to obtain unity among Senate Democrats to pass the bill on August 7th.


The bill, while historic, is limited in its strength. Here is what it can do:


  1. For the first time, the Secretary of Health and Human Services will have the ability to negotiate the prices of certain prescription drugs that are covered by Medicare. Negotiations will start with ten drugs in 2026, 18 drugs in 2028 and 20 drugs by 2029.
  2. Starting in 2025, out of pocket prescription drug costs for individuals with Medicare will now be capped at $2,000 a year. Certain drug companies will be required to pay rebates if they increase drug prices in Medicare faster than inflation occurs.
  3. Healthcare subsidies from the Affordable Care Act will now be extended by three years. These subsidies should keep premiums at $10 or lower for most individuals who receive coverage through the federal health insurance exchange.

Unfortunately, one key component of the bill that was struck down was a $35 per month cap on out-of-pocket insulin costs for Americans with private insurance, leaving highly expensive insulin products out of reach for many Americans.


While its passing marks a historic change in the pricing of prescription drugs and begins to address some inequalities within the healthcare system, politicians should have addressed insulin prices for the private market as well as expanded Medicare coverage.


On August 12th, the House passed the bill along partisan lines, President Biden signed it on August 16th. Biden has been outspoken in his support for the law throughout the process and upon signing the bill stated, “with this law, the American people won and the special interests lost.” 


The American people must not stop with a single success, which should be viewed as just the first step. The goal is now affordable prescription drugs for all Americans regardless of insurance status, age, class, gender, race, sexual orientation, or political affiliation. The people of this country deserve better than greedy drug companies and corrupt politicians; and victories like the Inflation Reduction Act should leave Americans cautiously happy. Happy at the prospect that we may someday live in a country that values the health of all of its citizens, but cautious knowing that there is more to be done and we cannot become complacent.


Photo courtesy of @potus on Instagram, August 17, 2022


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