US President Joe Biden declared victory over the powerful pharmaceutical lobby while addressing a rally for the Democratic Party in Albuquerque, New Mexico, on November 3.

Speaking about the new measures taken by his government in the healthcare sector, the President said he had been trying to reduce prescription drug costs for seniors.

"I've been trying this for 22 years. Finally, beat them," Biden said.

Inflation Reduction Act

The President was referring to the Inflation Reduction Act, signed into law by him in August, which is touted to tackle the problem of high healthcare costs in America and reduce prescription drug costs for seniors.

According to a White House factsheet, Americans pay two to three times more for prescription drugs on average compared to people in other countries. The factsheet also said that one in four Americans who take prescription drugs struggle to afford the medicines. The high cost has forced nearly three in 10 American adults to skip doses, cut pills in half, or not file prescriptions.

The Inflation Reduction Act allows Medicare to negotiate with pharmaceutical companies on some high-cost prescription drugs. The law ensures $800 per year lower healthcare premiums for 13 million Americans. Bringing relief to senior citizens, the law lowers their prescription drug prices and also caps their out-of-pocket expenses at $2,000 per year for these.

"Beginning January 1, seniors on Medicare — their out-of-pocket costs for prescription drugs can — no matter what it costs, no matter how much it costs, it cannot be higher than $2,000 a year, even if it’s a $10,000 cancer drug or $12,000," Biden said at the rally.

Staggered relief

There are two parts of the Inflation Reduction Act that will have a direct impact on drug prices. First, the federal government will negotiate prices of some high-cost drugs used by beneficiaries under Medicare. Secondly, pharma companies will pay rebates to Medicare if they increase prices of drugs used by beneficiaries faster than inflation.

While the inflation rebate provision will be implemented in 2023, the law does not require the federal government to start negotiating prices of some high-cost drugs until 2026, according to the Kaiser Family Foundation. It also limits the number of retail prescription drug to be negotiated in 2026 to 10. Another 15 retail drugs will be eligible for negotiation in 2027 and 35 more in 2028 and 2029.