AARP Hearing Center
President Joe Biden signed the Inflation Reduction Act of 2022 on Aug. 16. This historic legislation will help millions of Medicare enrollees better afford their life-sustaining medications, and millions more Americans will be able to pay their Affordable Care Act premiums.
AARP Membership— $12 for your first year when you sign up for Automatic Renewal
Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.
"This law finally delivers on a promise that was made for decades to the American people," allowing Medicare to negotiate prescription drug prices, said Biden, who was flanked by several senators and House members and an audience that included cabinet secretaries, staff and supporters in the State Dining Room at the White House. Because of this law, Biden said, "seniors are going to pay less for their prescription drugs" and "13 million people are going to continue to save an average of $800 a year on health insurance" because the law extends expanded subsidies on ACA policies.
With most lawmakers away from Washington, D.C. on an August recess, a celebratory signing ceremony has been scheduled for Sept. 6 at the White House. In addition to its health care components, the sweeping law includes some elements of Biden’s Build Back Better initiative, including investments in energy and climate solutions, and makes a number of corporate tax law changes.
"AARP has fought hard to lower prescription drug prices for decades," AARP CEO Jo Ann Jenkins said in a statement after the bill signing. "This is one of the most important pocketbook issues for older Americans — across political aisles and across the country. We have made our voice loud and clear: Drug prices have been out of control, and enough is enough."
The new law passed the U.S. Senate on Aug. 7 in a 51–50 vote, with Vice President Kamala Harris breaking the tie. The measure then cleared the House 220–207 on Aug. 12.
We have made our voices loud and clear: Drug prices have been out of control, and enough is enough.
The Inflation Reduction Act for the first time authorizes Medicare to negotiate the prices of some high-cost prescription drugs with pharmaceutical companies, puts an annual $2,000 limit on how much Part D prescription drug plan members will have to pay out of pocket for their medications, and levies tax penalties on drugmakers that increase product prices by more than the rate of inflation. The new law also caps the cost of Medicare-covered insulin at $35 a month and eliminates out-of-pocket costs for most vaccines under Medicare.
Medicare saves hundreds of billions of dollars over 10 years as a result of the new law, with the majority of the savings coming as a result of prescription drug price negotiations and the rebates to Medicare designed to encourage pharmaceutical companies to keep price increases to no more than the rate of inflation, according to an analysis by the nonpartisan Congressional Budget Office. That means beneficiaries will be able to get the same medications they do now, but some of those drugs will cost them, and Medicare, less. The savings will not be the result of any cuts to the Medicare program.
More on politics-society
What if Milk Prices Rose as Fast as Prescription Drugs?
Basic staples would be out of reach for many if prices went up at the same rate as popular prescription drugs
AARP Research: Prescription Drugs That Cost Medicare the Most
Brand-name manufacturers still increasing medication prices