Inflation Reduction Act aims to cap Medicare drug costs at $2,000

Yahoo Finance reporter Anjalee Khemlani explains how the Inflation Reduction Act will impact Medicare drug prices and other health care aspects to the legislation.

Video transcript

RACHELLE AKUFFO: Well, the Inflation Reduction Act also includes some changes to our health care system. Yahoo Finance's Anjalee Khemlani is here with what changes made it into the final bill and what didn't. Anjalee, what do we need to know?

ANJALEE KHEMLANI: Well, Rachelle, the bottom line that you need to know is Medicare is the most affected, and this is really big changes to the Medicare program in many years, in part because Medicare will now have the ability to negotiate drug prices, which is something that many advocates have been calling for for years. In addition, we know that there's going to be a cap for out-of-pocket costs for enrollees as well as insulin, which is a really big focus. As we know, insulin prices have come up over the years significantly.

So what there is is a $35 cap for Medicare enrollees alone. There was some discussion about the ability or possibility for those Medicare-- for broader the population to have access to that same cap. Now I want to get into that a little bit because there is a lot to focus on there.

Oh, sorry-- a last point as well-- the ACA subsidies extended through 2025, and that's really important for those who rely on the subsidies in order to become covered. We know that the Biden administration has touted the number of uninsured reducing in the past few years as a result of those subsidies. Now, back to insulin, which, of course, we know a really big topic of conversation, states, which is where some insurers are regulated, have introduced caps that range from $25 to $100 over the past few years. California pursuing-- manufacturing its own cheap insulin. Civica RX, that nonprofit health care group, also pursuing cheap production.

So a lot of focus on being able to give more access to those who need it. We know that one in four patients have said that they ration insulin as a result of the high cost in the past few years, according to a Yale study recently. So a lot of attention on this one life-saving drug. And that puts a lot of pressure on Eli Lilly, Sanofi, and Novo Nordisk, who account for 90% of the market. And some of them have introduced that $35 cap, but there are nuances there. And a majority are still looking at 30 days supplies at pretty high cost for patients. Back to you.