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News Article

US Inflation Reduction Act Aims to Lower Drug Prices

By Rodrigo Andrade | Mon, 08/22/2022 - 16:00

The Inflation Reduction Act of 2022, recently approved by the US government, introduces several provisions to improve healthcare services, including potential changes to prescription drug prices.

The US government will use technology to collect and analyze data and hire healthcare experts to enable direct negotiations for prescription drug prices for people over 64 years of age. The legislation includes a US$430 billion bill that would allow the federal Medicare health plan to negotiate the prices of up to 20 medicines for the elderly and the disabled, while also setting a limit to drug price increases and to out-of-pocket costs for individuals enrolled in the program.

Negotiations are expected to start in 2023. Meanwhile, the Centers for Medicare and Medicaid Services (CMS) plan to hire 100 positions during the next months to manage those negotiations. “One of the first things is for us to choose which drugs to negotiate. We have 10, and that is something that we'll be announcing next fall, so around a year from now,” said Chiquita Brooks-LaSure, Administrator, CMS, according to Reuters.

The US administration is reportedly considering 50 highly expensive drugs such as AbbVie treatment for rheumatoid arthritis, Bristol-Myers Squibb’s top-selling cancer drug and Johnson & Johnson’s blood thinner pill. CMS will collaborate with pharmaceuticals, health insurers and pharmacies to recognize and decide which are the drugs targeted to negotiate.

Besides targeting healthcare, the recently approved Inflation Act also aims to lower the US’s deficit and tackle the climate crisis. Part of its efforts in the latter part include tax credits for the acquisition of electric vehicles manufactured in North America, a decision that was celebrated by Mexico’s Ministry of Economy (SE). The bill extended the US$7,500 consumer income tax credit for the purchase of new EV and added a credit of US$4,000 for buying a used EV, as reported by MBN. “In our region, we produce together to compete globally. We must deepen our productive integration to provide wellbeing to our societies and leave no one behind,” said SE.

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Rodrigo Andrade Rodrigo Andrade Junior Journalist & Industry Analyst