August 9, 2022 – The Self-Insurance Institute of America, Inc. (SIIA) strongly opposes several prescription drug pricing provisions currently included in the Inflation Reduction Act (the “Act”) currently being considered before Congress. These potential changes to the law will result in a cost-shift of prices charged for prescription drugs offered to participants of employer-sponsored health plans, including the nearly 60% of Americans covered under a self-insured health plan. 

SIIA Members can use the following link to let their Member of Congress know about their concerns about drug pricing cost-shifting and the negative impact such policies will have on self-insured plans. 

 Click here to contact your Member of Congress

Being considered under reconciliation instructions, the Inflation Reduction Act includes sweeping drug pricing provisions that would:

• Allow the Department of Health & Human Services to negotiate the prices of up to 10 of the 50 most expensive prescription drugs purchased by Medicare Parts B/D starting in 2026, increasing to 20 drugs in 2029. 
• Require the payment of financial penalties or a refund of the above-inflation amount to the Medicare Trust Fund if the prices of prescription drugs increase faster than inflation in a particular year.
• Impose a $2,000 cap on out-of-pocket expenses for Medicare Part D beneficiaries.

While the initial iteration of the Act included private-sector health plans (i.e., individual market and employer-sponsored plans) in both the (1) drug pricing negotiations and (2) inflationary caps, private-sector coverage was eliminated from these provisions due to a violation of the Senate’s reconciliation rules, known as the Byrd Rule.

The elimination of employer-sponsored health plans from the Senate-passed version of the Act will have far-reaching consequences for employers and employees participating in both fully-insured and self-insured group health plans.   

These consequences will result in drug makers cost-shifting onto employer-sponsored plans price increases to make up for revenue lost due to these price controls incorporated into Medicare.  In addition, these higher-cost prescription drugs purchased by employer-sponsored plans – and even ACA individual market plans – will not only increase premiums, but will also lower the deficit reductions that Congress is trying to achieve by passing the Inflation Reduction Act.

Because the prices charged for prescription drugs by individual and employer health plans cannot be added back to the Senate-passed version of the Act, SIIA urges House members to drop the entire inflationary cap provision prior to passing its version of the Act later this week.  

SIIA members are encouraged to contact their Member of Congress and demand that the entire inflationary caps provision be dropped.  Otherwise, the premiums for employer-sponsored plans may become increasingly unaffordable for millions of Americans, not to mention the increased use of taxpayer dollars for purposes other than deficit reduction.

Please take a few moments to engage Congress and communicate your opposition. 

SIIA is committed to policy reform and industry best practices to help reduce the cost of prescription drugs for employer-sponsored health plans and their participants, evidenced by the release of our Drug Pricing Best Practice Guide earlier this year.  For questions, or to talk further about SIIA activities related to drug pricing, please contact Ryan Work, SIIA Senior Vice President of Government Relations, at [email protected].