The IRA, which Democrats passed on a partisan vote in 2022, let Medicare officials engage in putative negotiations with drug makers. These were de facto price controls, since the penalty for rejecting the government’s “offer” was a 1,900% excise tax on the drug’s daily sales.
The law also required drug makers to pay the government rebates on medicines prescribed to seniors if their prices increase faster than inflation. Democrats claimed the “savings” from these two provisions would pay for enhancements in Medicare Part D, including elimination of the coverage “donut” hole and a $2,100 annual cap on out-of-pocket costs.
These benefit enhancements have turned out to be much more expensive than Democrats and the Congressional Budget Office claimed. CBO in February quietly raised the baseline cost of the Part D program by roughly $700 billion through 2035, citing the Part D design as a leading driver. That’s a nearly 50% increase.