Washington, DC – New research contradicts promises of savings at the pharmacy counter for Medicare beneficiaries from the Inflation Reduction Act’s (IRA) drug pricing provisions. In fact, the study suggests some patients may pay more. In a research brief commissioned by We Work For Health with analysis performed by the IQVIA Institute for Human Data Science, researchers estimated what patients will actually pay for the 10 Part D medicines chosen by the Centers for Medicare and Medicaid Services for government price controls. The IQVIA Institute calculated how changes in Medicare coverage and other factors will impact patient out-of-pocket costs. The study reveals how unintended consequences of the law could lead to negative impacts for seniors, including increased costs and coverage barriers for certain medications.
The report finds the chosen drugs are already subject to aggressive negotiations and significant rebates, reducing the likelihood of the law having a meaningful impact on Medicare’s overall expenses. The report also highlights dynamics that will change between 2023 and 2026, which are likely to make CMS’ claim that the IRA will save Medicare $6 billion based on 2023 spending an overestimate. Specifically, CMS assumed there will be no changes in utilization of the selected drugs, no other changes to the net prices and no new biosimilar or generic competition for these drugs between 2023 and 2026. Finally, the report finds that the impact of the IRA’s drug pricing provisions on patients and the Medicare program is likely to be varied and complex – with significant potential for unexpected outcomes. Therefore, it will be crucial to continuously assess whether the targeted benefits are being achieved to inform future policymaking decisions.
Other key findings of the report include:
Government price negotiations are unlikely to lead to consistent reductions in patient cost sharing, with many patients experiencing negligible savings or even potentially higher out-of-pocket costs.
The law is likely to lead to significant changes in health insurance plan and benefit design, including the potential shifting of medicines to non-preferred tiers where patient cost sharing may be higher.
“This report further confirms what many have long warned against: Medicare’s so-called drug negotiation effort fails to achieve its stated goal of reducing patient costs and instead has a number of unintended consequences that threaten the development of future therapies and reduce choices for patients,” said Dan Leonard, Executive Director of We Work For Health. “As we see in the research, much of the so-called savings patients were supposed to see from the law are either exaggerated or will be offset by changes to plan design – and some patients may even see their out-of-pocket costs increase. The report underscores how complex insurance plan designs ultimately drive patient costs and how government price setting of medicines simply leads to changes in insurance behavior, not what a patient pays at the pharmacy counter.”
The study issued today was sponsored by We Work For Health with analysis performed by the IQVIA Institute for Human Data Science. The report has been developed independently by the IQVIA Institute for Human Data Science based on research and analysis undertaken by the IQVIA Analytics and Consulting Service.
To read the full study, “Key Context for CMS Prescription Drug Negotiations: Trends in Drug Spending and Patient Costs,” please visit Reports - IQVIA Institute or We Work For Health.
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About We Work For Health
We Work For Health brings together national and local business leaders, and labor, biopharma, patient advocacy and other healthcare-related stakeholders to support policies and initiatives that foster innovation and facilitate the delivery of lifesaving and life-enhancing medicines. As the bedrock of innovative jobs in the U.S. today, the life sciences sector supports more than 4.9 million American employees. Advancing and protecting these jobs is critical for those employees, the economies they support and the patients they serve.