Prescription Drug Affordability

Overview of the Prescription Drug Affordability

Prescription drugs are the medications that a patient is recommended to take after a review by the physician or medical consultant of the prevailing condition. The prescribed drugs are sourced from the hospital pharmacies or private pharmacies within the reach of the patient. Most of the prescribed drugs are paid from the medical cover or using pocket finance. In the United States, over 18 million people are unable to afford prescribed drugs. The inability to afford increases with age with families with an adult under the age of 65 years being the most affected (Reinberg, 2021). Further, studies show that over 40% of older adults have at least 5 prescription drugs with those with 3 to 4 chronic conditions being unable to afford the drugs. The majority of the American population suffering from chronic conditions such as diabetes, COPD, depression, or immunocompromised faces the challenges of affording to buy the prescribed drugs. This challenge of drug affordability has been addressed through various legislation with the most recent attempt being the passage of the Building Back Better Act (BBA) by the House of Representatives.

Proposed Healthcare Policy

In November 19, 2021, the House of Representatives passed Building Back Better Act (BBBA) that was designed to address the challenges facing the US consumers in accessing the prescribed drugs with the effective date being 2023. Building Back Better Act (BBBA) is a healthcare policy that is envisioned to have proposals that will have an enormous impact on the health, social, and environment as it addresses the issues emanating from the affordability of prescription drugs. The Act aims at addressing the rising and high prices of drugs in the United States healthcare system (Bodenheimer, & Grumbach, 2020). The Act has provisions that seek to lower the costs of prescription drugs for those with Medicare and private insurance. This in turn will reduce the spending on drugs by the federal government and private payers.

The Act requires the drug manufacturers to pay federal governments a rebate for single-source drugs and biologics that fall under Medicare Part B and in Part D if their prices are increasing faster than the rate of inflation. Thus, the prices changes of the drugs will be measured using the average sales prices for drugs covered in Medicare Part B or the average price of the manufacturer as contained in part D. For prices that are higher than the inflation, the difference should be paid by the manufacturer to the Medicare as a rebate. This affects lowering the prices of prescription drugs since it will cover Medicare patients, those insured by private entities, and uninsured individuals (Milstead, & Short, 2019). The rebated amount should be deposited in the Medicare supplementary medical insurance (SMI) trust fund. They ensure compliance for the manufacturers who fail to pay the requisite rebate amount will pay a penalty of a minimum of 125% of the original rebate amount with 2021 as the base year for computation. The Act advances funding proposals to the Centers for Medicare and Medicaid Services (CMS) over a 10 year period that are distributed as follows $ 80 million for drugs in part B and 80 million in part D drugs respectively (Freed, Neuman, Cubanski, 2021).

The Act puts amendments on Part D of Medicare by putting a cap on out-of-pocket spending at $2,000 in 2024 that should be increased every year based on the rate of increase per capita on the affiliated costs. The act proposes to lower the cost to the beneficiary on the cost of drugs from 25% to 23%. Moreover, it seeks to lower the Medicare share of total costs that are above the designated cap from 80% to 20 % for original drugs with 40% provision for generic drugs. The drug manufacturers are required to give a 10% discount on brand name drugs for the first-time beneficiary for costs that are below the stipulated cap for out-of-pocket spending rather than the current 70% price discount. The act makes it mandatory for the insurers among them Medicare Part D plans, private companies, or health plans for individuals to institute cost-sharing plans with patients for insulin products no more than $35 per month (Bodenheimer, & Grumbach, 2020). Further private companies or individual plans should not cover all insulin products but rather only one dosage form such as vial or pen and insulin type and no more than $35. However, all insulin products should be covered by 2025. The BBBA provides that all adult vaccines that are catered for under Medicare Part D recommended by Advisory Committee on Immunization Practices (ACIP) should be covered at no cost in line with the coverage of vaccine existent in Part B of Medicare.

Success and Failure of the Provision

The passage of the Act seeks to prohibit the implementation of the November 2020 rule that was issued by the Trump administration. The rule had eliminated rebates that were negotiated between the manufacturers of the drug, pharmacy benefit managers, or sponsors of health plans catered in Medicare Part D. This would have been achieved by removing the safe harbor protections that are in place in the rebate arrangements under the federal government’s anti-kickback statute. Even though Trump’s final rule had not been implemented due to postponement, it coming into effect would have a far-reaching implication on the healthcare system. For instance, the rule would have made small group beneficiaries using drugs that enjoyed significant rebates would have witnessed a great decline in their out-of-pocket spending as manufacturers extended the discounts at the point of sale (Reinberg, 2021). The overall effect of this is those not in the small group would have experienced hefty payments out of pocket. The rebate rule by the Trump administration had its cost factored in the federal spending even though it has not taken effect. As a result, repealing it would result in savings of $ 142.6 billion between 2026 and 2031 as the BBBA provisions become operational (Freed, Neuman, Cubanski, 2021). The savings of $ 50.8 billion from 2023 to 2026 due to the delay in implementing the final rule will be realized through the infrastructure, investment, and Jobs Act.

When the cost-sharing for vaccines covered under part D of Medicare is eliminated, older adults will record significant uptake of vaccines as lower out-of-pocket costs for vaccines are realized. This will result in an increase in federal spending over 10 years with $ 3.3 billion. Through payment of $35 instead of 25% coinsurance or higher copayment is expected to reduce out-of-pocket costs of insulin products leading to savings among millions of insulin users holding private covers (Bodenheimer, & Grumbach, 2020). However, there will be increased federal spending by $ 1.4 billion and a decline in federal revenue by $ 4.6 billion due to insulin cost-sharing limits. Due to the limit on cap on out-of-pocket spending at $ 2,000 and reduced coinsurance from 25% to 23% the enrollees are likely to face higher Part D premiums due to higher plan liability for drugs that costs raises above the spending limits. The benefit redesign and smoothing provisions contained in BBBA will result in reduced federal spending of $ 1.7 billion.

Solutions to the Challenges posed by the Provision

In conclusion, the BBBA provisions are faced with myriad challenges despite addressing some loopholes witnessed in Obamacare. Some of the challenges are inflation rebates for manufacturers, insulin cost-sharing, and instituting a cap on out-of-pocket spending. To mitigate the effect of higher liability on enrollees of $2,000 spending cap, the Act has increased Medicare subsidy premium from 74.5% to 76.5%. However, to realize the greater impact, the plans should integrate strategies that compel the beneficiaries to exercise control of costs that are below the ceiling. This can be achieved by pushing for the use of generic drugs that limit the increase in premium (Freed, Neuman, Cubanski, 2021). To overcome the challenges of insulin, cost-sharing the beneficiaries of Medicare can opt to enroll in part D plan that enlists them in the model of the innovation center. The model has enhanced drugs plans that cover insulin products at a copayment of $35 monthly that are deductible with initial coverage and gap phases of the Part D benefits. This will ensure the beneficiaries enjoy the maximum benefit in the cost-sharing plan. Drug manufacturers can opt to leverage their rebate payment by charging higher prices for new drugs that are launched in the market. As such, the drugs will avoid the scrutiny associated with the provisions especially in instances where there are no other therapeutic alternatives or the drugs falls under the protected class.


Bodenheimer, T.S. & Grumbach, K. (2020). Understanding health policy: A clinical approach (8th ed.). McGraw-Hill.

Freed, M., Neuman, T., Cubanski, J. (2021). Explaining the Prescription Drug Provisions in the Build Back Better Act.

Milstead, J.A. & Short, N. M. (2019). Health policy & politics: A Nurse’s Guide. Burlington, MA: Jones and Bartlett.

Reinberg, S. (2021). 18 Million Americans Can’t Pay for Needed Meds

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