President Biden’s 2022 Inflation Reduction Act: Impact on Medicare

Key Takeaways

• The IRA aims to save money for Americans using Medicare.
• Concerns arise about drug companies’ reactions to the IRA.

President Biden’s Inflation Reduction Act (IRA) seeks to benefit Medicare beneficiaries by reducing drug costs. However, concerns linger regarding Big Pharma’s response to this legislation, especially with government pressure mounting against drug manufacturers.

The Inflation Reduction Act introduces the Medicare Prescription Drug Inflation Rebate Program to control rising drug costs. Companies face rebates if drug prices outpace inflation, with funds directed to the Federal Supplementary Medical Insurance Trust Fund for future Medicare benefits.

Study Insights

Researchers analyzed Medicare Part D coverage for 10 drugs from 2019 to 2023, noting increased access and coverage percentages for most drugs. Notable improvements were observed for specific medications like ustekinumab, dapagliflozin, and etanercept.

The study revealed rising coverage levels for all but two drugs over the analyzed period. Notably, access without prior authorization saw significant variations among drug categories, highlighting evolving trends in drug coverage under Medicare.

Concerns persist that despite initial positive trends, access to essential medications might face hurdles due to increased utilization management and adverse tiering practices by insurers. The IRA’s formulary inclusion mandate aims to counter such challenges but uncertainties remain.

As Americans brace for potential responses from drug companies to the IRA, out-of-pocket costs are set to be capped by 2025. By 2024, individuals with high drug expenses under Medicare Part D will see an annual out-of-pocket cap of $3,500, extending to all Part D beneficiaries in 2025.

References

1. U.S. Department of Health and Human Services. HHS announces savings for 41 prescription drugs thanks to inflation rebates from the Biden-Harris administration’s lower cost prescription drug law. hhs.gov. Published March 26, 2024.

2. Patterson JA, Wagner TD, O’Brien JM, Campbell JD. Medicare Part D Coverage of Drugs Selected for the Drug Price Negotiation Program. JAMA Health Forum. 2024;5(2):e235237. doi:10.1001/jamahealthforum.2023.5237