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Deciphering the Inflation Reduction Act with Michael Ward

Published October 19, 2022

Show Notes

In August, the Inflation Reduction Act was signed into law. The bill includes provisions to address a number of issues including healthcare, to climate change, and deficit reduction. In this episode, we’re joined by our very own VP of Public Policy and Government Relations, Michael Ward, to discuss some of the most important provisions of the bill for older adults, as well as how you can engage with the federal government to ensure that patients are able to easily benefit from the law’s changes.

Episode Transcript

Sue Peschin:
Hello everybody, and welcome to the latest episode of This is Growing Old. In August, the Inflation Reduction Act was signed into law. The bill includes provisions to address a number of issues, including healthcare to climate change, and deficit reduction. In today’s episode, we’ll talk about some of the most important provisions of the bill for older adults, as well as how you can engage with the Federal Government to ensure that patients are able to easily benefit from the law’s changes.

I’m joined today by a very special guest, Michael Ward, the Alliance’s vice president of public policy and government relations. He is here today, in the office with me, in the Brain Trust, in his office, which is not very well decorated yet, but it will be. Michael leads the Alliance’s advocacy efforts with Congress, and with federal agencies on behalf of older adults. Over the last two years, Michael has also led the work of project Lower Out-Of-Pocket costs, known as Project LOOP for short. Through this coalition, Michael has led patient advocacy groups in advocating for the creation of an annual limit on Medicare beneficiaries, out of pocket costs for prescription drugs, medicare was previously the only program that did not have a limit on out-of-pocket costs, as well as advocating for the ability for patients to pay their drug costs in zero interest payment installments. Michael has hosted the podcast previously, but this is his first time as a guest. Welcome, Michael.

Michael Ward:
All right, thanks, Sue, and I’ll get this decorated as soon as I have a budget for it.

Sue Peschin:
We’ll see about that budget now. All right, Michael, you’ve led the Alliance’s efforts to promote affordability for prescription drugs, this is really an important issue to the Alliance, and to older adults, all Medicare beneficiaries really, and there are so many stories of people having to decide between buying their medicine or being able to afford other basic living expenses. Can you talk about the provisions in the Inflation Reduction Act that will help patients be able to afford their medications, and also your work in helping to ensure that these provisions were included in the law?

Michael Ward:
Absolutely, I think this all comes back to starting with it’s essential to healthcare to actually be able to access the medications, the care that you are prescribed, right? If you can’t actually afford the medications that you’re prescribed, then so often people just don’t end up filling the prescription, or they may cut a pill in half, not take the recommended dosage, and so this actually has a very material impact on people’s health. It’s not just a matter of nice to have, it’s really kind of a need to have thing, and people were making these decisions oftentimes between their medications, and what they’re buying at the grocery store that month, maybe their rent, and so this is a very pertinent issue to the patients, and certainly the older adult population that we work on behalf of.

There were a few really helpful provisions in the Inflation Reduction Act that we’ve been working on for the last couple of years to get passed. The first is an annual out-of-pocket maximum of $2,000 per year, so no matter what happens, no matter how many medications you need that are covered by Medicare, and even if you have a new drug that comes on during the year, because maybe you’re diagnosed with something new, the most that any patient will be charged, any given year, out of pocket is $2,000, so this is a really big difference. As you mentioned, Sue, there was no out-of-pocket maximum before, so there were patients that would pay $7,000, $8,000, over $10,000 a year that were on Medicare, and certainly for so many folks that are on social security or have a fixed income, it just wasn’t sustainable.

It’s not sustainable to pay those amounts of dollars each year, so this is a really important provision and that we’re really excited about moving forward, and that goes into effect in 2025, so we still have a few years that we’re bridging, but in just a little bit more than two years, that’ll go into effect. In the meantime, in 2024, so not next year, but the year after that, this is kind of a bridge policy, but there’s an elimination of the patient’s out-of- pocket cost and the catastrophic phase, these are really high costs. Right now, the catastrophic phase starts when a patient spends over $7,000, and next to $7,000 out-of-pocket for any given year, so for a small number of patients in 2024, they’ll start seeing some benefits, but then the rest of the population will benefit in 2025.

And then the other kind of big piece that you mentioned are these no cost payment installments, known as smoothing, so this will enable a patient, if you have prescriptions that amount to $1,200 in February of each year, you’ll be able to spread that $1,200 over the remaining 11 months of the year, so you’ll be able to divide that cost into smaller installments that’ll make it easier to afford, which I think in combination with the cap is really helpful, because I know that if you have those $1,200 cost in February, and then you have them again March, you’re like, “Well that doesn’t really help as much.”

But if you know that you’re limited to $2,000 cap, then there’s a maximum per monthly cost that you’ll have, and hopefully in spreading that over time, it’ll allow the patients that are on Medicare to better afford their medications. So this has been great, we were excited about these provisions, we’ve worked with over a hundred plus organizations to get these provisions moving forward, many meetings, long meetings with Congress and with the administration to make sure that these provisions were in every major healthcare bill over the last handful of years, and so we’re excited to continue to work and make sure these are implemented in a way that works well for patients in the future.

Sue Peschin:
Absolutely, it is crazy, PetCo’s been doing this for years that this has not caught up in healthcare, so finally, right? There’s still a little bit more work to do on those, but good. We’ve also had the chance to work extensively in ensuring that older adults are equipped with accurate information, and remaining up to date on vaccines through our Best Shot campaign, that your colleague Lindsey leads, as well as co-convening the COVID 19 Vaccine Equity and Education project. The Inflation Reduction Act had some good news for Medicare beneficiaries related to vaccine coverage that were big victories, can you share a little bit more on those?

Michael Ward:
Yeah, absolutely, so this is kind of the same principle, right? By reducing financial barriers to people receiving the medications, or in this case the vaccines that would help them stay in good health, we’re really helping promote health long-term for older adults, and we’ve been privileged to work with partners in the Adult Vaccine Access Coalition, so this is a great coalition of groups in the patient [inaudible 00:08:10] as well as in the provider space, as well as on the industry side to really help ensure that patients have access to preventative vaccines. So right now, a few vaccines are covered with out-of-pocket costs by Medicare, but it’s only for, there’s a lot vaccines that are recommended by the CDC for older adults that are not currently covered by Medicare, so for some of these vaccines, older adults would actually have a pretty substantial out-of-pocket cost.

I know that, anecdotally, one of my colleagues was saying that she told her mom that before she turned 65, that she should go ahead and get her vaccines all up to date while she was 64 and still in commercial insurance, that way she didn’t have to pay a higher cost whenever she went on Medicare, and so that was out of line with public health priorities and how we should be thinking about vaccines at large. Like I said, we’ve been working for these issues, these bills as well, but the Inflation Reduction Act eliminates co-payments for all CDC recommended vaccines for all Medicare beneficiaries in 2023, so that’s all beneficiaries that are Medicare, so that’s 65 plus, that’s the individuals, people with disabilities population, everyone that’s on Medicare for any vaccines that are recommended by the CDC starting next year fully covered no out-of-pocket costs, so that’s great news.

And then the Inflation Reduction Act also included a bill known as the Happy Act, which is a great name for a bill, I wish I came up with it, which eliminates co-pays for vaccines starting in October of 2023 in the Medicaid program, so this is the state Medicaid programs that provide coverage both for children, for lower income beneficiaries, and this specifically goes into effect in states that did not accept the Medicaid expansion, so if you live in a state that the Medicaid program already accepted the Medicaid expansion that was in place as part of the Affordable Care Act, all those vaccines are currently covered, they have been covered for a number of years, but this bill makes it where no matter what state that you live in, you’re on equal grounds and you will not have to pay a co-payment for any CDC recommended vaccine. So again, good news on that front that we’re excited to see move forward.

Sue Peschin:
That is good news, that is very good news unless you really don’t like getting shots, but otherwise [inaudible 00:11:06]. So, what are some of the other provisions of the bill that older adults should be aware of?

Michael Ward:
So another provision that we have been working towards from the Alliance’s perspective is an inflationary cap, so this limits the amount that the cost of prescription drugs can increase year over year, so basically this means that if you’re paying X amount for a drug in 2023, that it won’t be X amount plus 25% in 2024. This really will provide more predictability for patients as they’re thinking forward as to what their drug cost may be from year to year, and it also provides more predictability of drug purchasers and insurers in terms of drugs costs, and just the certainty of knowing that there won’t be an excessive price increase from year to year. However, I’ll say that this isn’t a silver bullet bill, not everything in the Inflation Reduction Act is positive, it’s a huge bill that includes everything from climate change provisions, to inflation reduction, to healthcare, and specifically within the healthcare provisions, [inaudible 00:12:27] supportive of a lot of those provisions in those other areas as well.

There’s several provisions within the healthcare sphere that we’re concerned may impede the development of new therapeutics moving forward, especially for therapeutics that are focused on older adult populations. A lot of folks may have heard this termed as price negotiation in terms of what you’ve read in the media stories about it, and I think whenever you hear the term negotiation, you’re thinking about how you go to a car dealership, you both sit down, you go back and forth, you come out with a price, it’s somewhere in the middle, but the Inflation Reduction Act doesn’t work like that. Basically, Medicare will tell drug manufacturers, “this is the price that Medicare is willing to pay for the drug, and if you refuse to sell it to us at that price, you get to pay an up to 95% excise tax or a civil monetary penalty instead.”

Usually there’s a carrot and a stick in negotiations where you can find something that both parties kind of benefit, but this one is really all stick, and I’m not saying that patients and the public are naturally going to feel a lot of sympathy for large companies, but there are a lot of small biotech companies as well that are doing all of this work, that this will really impact the potential for new cures from some of those companies. And particularly for the older adult population, there’s implications for investment in areas of really high need, like Alzheimer’s disease where any drugs that make it to market would really face negotiation just because there’s such a large need, there’s such a large population that would end up taking it that whenever it becomes eligible for negotiation, it would hit that list, and those high need areas like Alzheimer’s disease tend to have really high failure rates whenever they’re in their clinical trials.

So it’s an inherently risky area for pharmaceutical companies to invest in, and so having fewer upside returns, if something does end up working out for patients in those clinical trials, may prevent some companies from taking some of those calculated bets to invest in those spaces in the first place. I think probably everyone that’s listened to this podcast before, and listened to Sue and I talk, we’ve warned about the use of quality-adjusted life here, and in setting prices there’s discriminatory impacts in older adults that if you are older, over the age of 80, and even if you don’t have any other conditions, you’re the ideal patient, you still can’t be considered to be in perfect health, and so if CMS is using calculations like this to help set prices, that’s really going to have a negative impact, especially in those condition areas that are focused on the older adult population.

And those are the primary concerns. This is my personal policy issues, the thing that I have trouble with in the bill, but drugs are exempt from negotiation if they are approved by the FDA for a single rare disease indication, but they lose that exemption if they’re able to treat more than one disease, so if something can treat one kind of cancer and also can treat another kind of cancer, then if it can treat one kind, it’s exempt from negotiation, but if it’s for two, I’m sorry, you’re included in the negotiation pool. So this really discourages research to learn if drugs that may work for one condition can successfully treat another disease, and I think that’s detrimental in terms of us being able to make progress quickly to combat disease in multiple areas.

Sue Peschin:
Yeah, that’s right. Just to put a finer point on it, the way that it was explained to us is, if there is a drug that treats a metastatic type of cancer, like a breast cancer, and then a company would typically do some research on it to see, would it have the same effect in metastatic lung cancer? And there are some drugs, without naming names here, there have been research in those areas and they’ve found several successful applications for them that have extended people’s lives, or helped improve their quality of life, even if they weren’t able to really make an impact on the disease itself necessarily.

And that’s very impactful for families, and that is the type of research that you’re talking about that will go away, because it’s not worth the investment risk for companies. I think also aside from the interest of companies, there are potential access issues around these types of policies, because it doesn’t preclude the insurance companies from continuing to do things like make you have to try another therapy and fail on it first before you get the newer therapy, or have to get special permission from your doctor in order to get access to the therapy.

So those types of things that are known as utilization management, that can still happen here, and is likely to happen here, so there’s a couple of different implications. And then everything that you’re mentioning, the National Council on Disability wanted to see an explicit QALY ban that didn’t happen, everybody who listens in here knows quit QALYs, that we are against use of the QALY, and it wasn’t listened to, which makes us worried that they want to go there with this, and so we’re going to keep a tight watch on it to make sure that doesn’t happen. Well, there are definitely provisions in the Inflation Reduction Act that are really good for patients, and some that we’re worried about, so what are the key changes where patients can make their voice heard, and help ensure that the provisions of the law are implemented in a way that helps them, rather than harms them?

Michael Ward:
Yeah, in any law, there’s room usually written for agencies to figure out how they want to implement a law, and that’s the case here as well, there are some things where I think patients may have to be a little bit more proactive to make sure that their voice is heard, and in this particular case, given the size of the law, and how many implications, and the timeline that it’s to be implemented on, it’s pretty quick in a lot of ways, but there’s definitely room for patients to get involved. We talked about the zero interest payment installments up front, that cost smoothing, that is an area where we have been working a lot over the last few years, we had principles for patient center smoothing, so those included things like a grace period.

So if you’re five days late for a payment, it doesn’t disqualify from you from using that in the future, that patients would still have access, or if you miss a payment for any reason, maybe you’re in the hospital for a couple of weeks and you miss a payment, and then you could be disqualified under the way that the law is currently written, so there’s definitely room for the Medicare program in particular to provide some guidance to the plans that are Medicare. A lot of folks are enrolled in Medicare advantage plans, or a prescription drug plan, so you’re on Medicare, but maybe you get your coverage through an Aetna, or a United Healthcare, or whoever the case may be.

But Medicare can provide common rules of the road that all plans have to cover, that way no matter what plan you’re on, you have the same experience, you have the same rules, and so we’re really encouraging the senators for Medicare medicaid services to do that, and to include some of those provisions in their regulations that allow patients some flexibility, in case they have a life circumstance come up, as we all do, to make sure that they still have access to this flexibility. The other piece in terms of what we talked about in the last question around negotiation, there is limited transparency into that process, CMS is going to be implementing a lot of that potentially without public comment, just through guidance, so it won’t be like a formal, “we’re asking everybody to write letters about this,” and so this is where we’re talking about it’ll take a proactive approach in order to get involved.

But we think it’s really important for patients to be involved here to make sure that the Medicare program follows existing civil rights laws and recommendations, as you mentioned the National Council on Disability to prevent discriminatory impacts from the use of QALY, the Affordable Care Act actually barred the use of the QALY in the Medicare program, there’s also earlier laws including the Americans with Disabilities Act, the Rehabilitation Act that also provided guidance in this area, and we just need Medicare to follow that precedent.

We need them to follow the rules that they’ve set to make sure that older adults, people with disabilities aren’t discriminated against as they’re implementing price negotiation, and frankly, there’s also alternatives to the use of QALY. CMS has a pretty big budget now, to figure out how to implement ways of determining value of a drug, and we really want CMS to focus, and elevate, and place value on the outcomes that patients actually care about, rather than all the focus and outcomes being about what insurers are most willing to pay for. We encourage folks to reach out, we love to work with any patients that are listening today on these things, there’ll be opportunities to write your congresspeople, your senators who can weigh in with Congress, as well as chances for folks to actually engage directly with the Medicare program, potentially in upcoming meetings over the next set of months and in the next year, so I would love to work with anyone that’s listening to make sure that your voices are being heard during this process.

Sue Peschin:
Great. Yes, and we have a good online system where it makes it really easy to reach out to your member of Congress, so definitely get involved, especially with this guy. Okay, so I’m going to just ask you a variation on the theme of questions that we ask everybody who we have as a guest, since I know that you have done the same, what did you imagine growing older would be like when you were a kid?

Michael Ward:
Yeah, to be honest, I probably didn’t put a whole lot of thought into it at the time. I was unusually driven in that I wanted to make every moment count as I grew older, and make sure that it is making a maximum impact, and the lives of people around me and everything else, and I think what’s been interesting is I’ve started to grow older as I’ve had family, and all those things is that in terms of finding meaning and making those moments meaningful, it isn’t always about what you’re doing next in your career, or just whatever the next rung on the ladder is.

It’s been more about developing a community, and being around people that you care about, and you’re investing with people that you like at work, as well as the friends that you have at home, and so I think it’s been interesting because, my wife and I actually talked about this just a couple weeks ago because we were out for anniversary, we’re like, “Well, what were you like, over that decade plus ago, whenever we got married?” She’s like, “you are really focused on that,” and that’s been a change, I’m not saying whether it’s good or bad, but it’s different, and so I think that’s been a good thing for me.

Sue Peschin:
That sounds like a great thing, now you just need to put a little bit of time into buying a poster or two.

Michael Ward:

Yeah, I’ll take advice and we’ll have a poll.

Sue Peschin:
No, very good answer, I love it. So what do you see now that you are getting older? What do you enjoy most about it?

Michael Ward:
I think it’s just the perspective that having some years under your belt bring, there’s things that aren’t a big deal that you thought were a big deal when you were younger, and so I think it’s just the ability to place things in context a little bit more, and it really gives a chance in thinking through whatever’s next in life, and the goals that we all set out for ourselves. It just provides perspective on what those should be rather than just what society may think, or any expectations that you may have from family or anything else.

I think as you grow older, you take more and more ownership of your own story, of your own life, and I think that’s all exciting, is when you get to a point that you know that you’re authoring the story and no matter what track your life is on, you could do something completely different tomorrow if you wanted, you have that opportunity, and you have the opportunity to stay where you are and do what you’re doing, or do other things if you want, and by staying where you are that you’re really committed and you’re excited about what lies ahead of you and what you’re pursuing.

Sue Peschin:
That’s awesome, I love that. I love that sentiment. So can you wrap us up by singing like a verse or two of I’m Sick Of Drug Pricing?

Michael Ward:
As folks in this office would know, whenever I was being interviewed for this role, I asked Sue, I said, “Do you do much on drug pricing? Is that an area that the Alliance really works in?” And she’s like, “We don’t really do a whole lot in that area.” I’d be happy to write a song about that, I can ad lib now, but it’s tough because it is an important issue. I will say that in the last two years and digging into it with you, there’s implications that you don’t necessarily think of from a surface level that it does impact patients in a very real way, it’s not necessarily just a black and white issue, and like so many areas of policy there’s nuance, and so yes, totally could write the song, glad we’ve engaged in it, but I love talking about things like home and community based services and other things that help patients as well, and so excited to work with groups on those areas as well.

Sue Peschin:
Absolutely, I think it’s fair to say that you’ve probably lived the song, I’m Sick Of Drug Pricing.

Michael Ward:
That’s true.

Sue Peschin:
And you have done an amazing job here, not only on that issue, but on so many others. We are so glad you’re here, and that you are giving service to others, and nurturing other folks that work here with you as a colleague, and I appreciate working with you, so thank you so much for being my guest today, Michael, and thank you to everybody listening in for joining today’s episode of This Is Growing Old. Please reach out to Michael, and thank goodness they’ve spelled this out for me, at mward, M-W-A-R-D, If you’d like more information on how to get involved, and make your voice heard at CMS as the agency starts to plan and implement the provisions of the Inflation Reduction Act, you can stay up to date on the latest news and events from the Alliance by signing up for our newsletter on the Alliance website, or by following us on Facebook, Twitter, LinkedIn, and Instagram. Matt, you should be excited that Michael had me mention all of this. I look forward to joining you again next time on This Is Growing Old. Everybody, have a great day.

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