TL/DR –
The Inflation Reduction Act (IRA) was passed in 2022 with the goal of providing financial relief for American Medicare users by reducing drug costs and expanding benefits. However, two years after its passage, concerns have arisen about how its provisions, particularly the Medicare drug price negotiation program, will be operationalized. A survey conducted among members of Cencora’s Managed Care Network found that 44% of respondents predicted that the IRA would have a negative financial impact on Part D plans, with changes leading to narrower formulary design and higher premiums.
The Inflation Reduction Act (IRA) and Its Impact on Medicare
Since its enactment in August 2022, the Inflation Reduction Act (IRA) aims to provide considerable financial relief to millions of Americans with Medicare coverage. However, almost two years later, there are still unresolved questions regarding the specifics of the IRA, particularly the Medicare drug price negotiation program.
Clear guidance on the data submission required from manufacturers has been provided, says Corey Ford, Vice President of Reimbursement and Policy Insights at Cencora. However, there’s an existing lack of clarity on the operationalization of the manufacturer fair price.
Cencora’s survey, presented at the 2023 AMCP Nexus Meeting, revealed that 44% of the 50 participants predicted the IRA would have an unfavourable financial impact on Part D plans. Around 52% anticipate somewhat narrower formulary design, with 24% expecting significant narrowing due to changes imposed by the IRA.
Ford suggests that 2024 data could be an indicator of what 2025 might hold, with potential challenges including higher utilization management and fewer Part D plans. “What we’ve seen is roughly a 12% decrease in standalone drug plans, higher utilization management and increased premiums,” he stated.
For more insights from Corey Ford, find an in-depth interview with him at the AXS24, Asembia Specialty Pharmacy Summit held in Las Vegas at Drug Topics’ coverage of AXS24.
References
1. Inflation Reduction Act of 2022. Department of Health and Human Services. Reviewed March 26, 2024. Accessed May 3, 2024.
2. McCormick B. How payers expect the IRA to financially impact Medicare Part D plans. AJMC. October 24, 2023. Accessed May 3, 2024.
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