HHS Region V director extolls Inflation Reduction Act’s drug pricing reforms

Earlier this month, Medicare unveiled the fruits of its negotiations with pharmaceutical companies on 10 drugs. More than 280,000 Illinois Medicare enrollees take at least one of the medications.

“This has been a long time coming,” said Michael Cabonargi, regional director for the Great Lakes region of the U.S. Department of Health and Human Services. “This is just fulfilling a promise that President Biden and Vice President Harris made.”

Cabonargi’s region includes Illinois, Wisconsin, Michigan, Ohio, Indiana and Minnesota, as well as 34 tribal nations.

He spoke to Health News Illinois about the price negotiations, which were allowed under the Inflation Reduction Act.

Cabonargi noted the law includes other drug pricing reforms, like making recommended vaccines available at no cost for those with Medicare Part D.

Edited excerpts from the interview are below.

HNI: How does this impact Medicare?

Cabonargi: The Inflation Reduction Act said that Secretary (Xavier) Becerra and (the Department of Health and Human Services) needed to negotiate the 10 drugs that are the most prescribed and the most expensive. Right now, there are about 9 million people with Medicare Part D coverage that take at least one of the 10 drugs to treat conditions such as cardiovascular disease, diabetes, autoimmune diseases and cancer … The estimates that we’ve got at HHS is that Medicare would have saved an estimated $6 billion in 2023 with the Inflation Reduction Act as a result of these negotiations. That’s real savings for Medicare.

HNI: How does this impact those not on the program?

Cabonargi: This is life-changing because it’s going to make Medicare exist longer, and it’s going to save America’s seniors money right now. But it’s also market-changing because we’ve seen that up until the Inflation Reduction Act, Medicare didn’t have the ability to negotiate prices with prescription drug companies. The Department of Veteran Affairs could, for example, but Medicare was prohibited by law from negotiating prices. More than 50 percent of America’s seniors receive their healthcare through Medicare. And so this is changing the market of healthcare economics as well, showing that if you’re willing to get in the fight and negotiate with prescription drug companies, you can bend the curve and change healthcare economics for the positive.

It’s probably a good time to talk about this process too. As Secretary Becerra would say, if he were on the call, the drug companies did two things after the passage of the Inflation Reduction Act and they were forced by law to engage in good-faith negotiations with Medicare. First of all, they sued. And second of all, they started to negotiate. This process that Medicare went through in negotiating with the drug companies was comprehensive, thorough and transparent. HHS met with patients, providers, pharmacists and others throughout the negotiations, and the drug companies had the opportunity to choose whether to participate, to make counter offers and to negotiate prices over the last several months. Ultimately, we came together and reached an agreement that will benefit the American people.

HNI: Pharmaceutical Research and Manufacturers of America CEO Steve Ubl said that the Inflation Reduction Act “did nothing to rein in abuses” by insurers and pharmacy middlemen that decide what medicines are covered and what patients pay. He also said it’s led to fewer Part D plans to choose from and rising premiums. What is your response?

Cabonargi: I’ll let big pharma do what they do best and talk about their members and their drug companies’ interests. I would just say that Medicare was prohibited by law from doing what it did here because the extremists fought tooth and nail in partnership with their allies and the drug companies to prevent HHS and Medicare from negotiating with the drug companies. The Inflation Reduction Act gives Medicare the tools it needs to get the best deal for the American taxpayers and people in Medicare. Medicare drug price negotiations and inflation rebates are really important tools to curb some of these outrageous price hikes.

We talked about the free vaccines that are available under Medicare Part D. We talked about the market-changing impact of prescription drug price negotiation. Two other things are important. Right now, Medicare-covered insulin is capped at $35 a month. If you want to respond to big Pharma to say, ‘We can see how we can move the curve’ — on day one, insulin capped at $35 a month. That led to other changes. Inhalers are now capped similarly, I believe, at $35 a month … And then also, starting Jan. 1, all Medicare Part D enrollees will have their out-of-pocket drug costs capped at $2,000. That’s so important because that works so well with the lower cost of prescription drugs. And I’ll also point out too that (the Centers for Medicare and Medicaid Services) is putting together a payment plan system, so that $2,000 drug cost can be spread out over 12 months.

HNI: PhRMA also said this could impact research programs, resulting in fewer treatments. Do you share those concerns?

Cabonargi: The drug manufacturing industry is strong and thriving. America has the most innovative companies in the world, and I’m sure they’ll continue to find ways to make lots of money. With all of the changes in this administration’s prescription drugs laws, drugs will be more affordable, and both patients and the drug companies will reap these benefits.

HNI: What’s next?

Cabonargi: By Feb. 1 of 2025, CMS will select up to 15 new drugs covered by Medicare Part D to negotiate for 2027. For 2028, it will negotiate up to 15 new drugs covered by Part D or Part B, and up to 20 more drugs for every year after that, as laid out in the Inflation Reduction Act. While that’s happening, Medicare Part D enrollees will benefit from this $2,000 out-of-pocket cap on their drug costs, further evidence that the (Inflation Reduction Act) is making medicines more affordable.

But none of this is written in stone. The drug companies have their allies and the extremists who are fighting tooth and nail to repeal the Inflation Reduction Act. It’s one reason that President Biden and Vice President Harris have fought so hard to keep the (Inflation Reduction Act) on path to where it is. Because what is a 10-drugs negotiation becomes 15, becomes 20. It really does become not only life-changing, but market-changing.