Impact of the Inflation Reduction Act on Patient Assistance

Learn more about the impact of the Inflation Reduction Act on patients, providers and foundations.

November 15, 2023
Inflation Reduction Act

The Inflation Reduction Act (IRA) is set to bring sweeping changes across various facets of healthcare.  The IRA will affect patient expenses, reimbursement models, foundations, Part D plan design, manufacturers and pharmacies. Here's a breakdown:

Impact on Patients:

Starting in 2024, the IRA will eliminate the 5% cost-sharing for Medicare Part D patients in the catastrophic coverage phase, capping expenses at $3,250. By 2025, Medicare Part D coverage will be simplified, a $2,000 out-of-pocket cap will be instituted, and it will be permissible to distribute costs throughout the year. This will help patients’ out-of-pocket expenses which grew to $433.2 billion in 2021.  

Reimbursement Changes:

CMS will tie provider reimbursement to manufacturer fair price (MFP) for selected drugs. Reimbursement is planned for MFP + 6%, subject to sequestration. Because the MFP for selected drugs will be lower than average sales price (ASP), reimbursement will be lower.

Commercial and Medicare Advantage contracts with payers are often based on ASP, so the MFP negotiations could have additional implications in the private sector.

340B Program Modifications:

340B prices are calculated using a formula which includes best price. Since drugs selected for MFP will likely lower prices, this will ultimately reduce 340B prices.  

Philanthropic Contributions:

The anticipated impact on manufacturer revenue may lead to a decrease in donations to charitable assistance programs, affecting the support available for patients.

Pharmacy Challenges:

There are questions on how the MFP will be implemented. A Medicare Transaction Facilitator has been proposed by CMS as a method for pharmacies to receive credit for the difference between the non-MFP price and the MFP price of the drug. Additional questions around reimbursement and access to MFP are still to be determined.

The IRA aims to improve affordability for Medicare beneficiaries and save the Medicare program $102 billion over 10 years per the Congressional Budget Office. As this moves forward, it will be interesting to see the impact on various elements of the US healthcare system.