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Three years after the passage of the Inflation Reduction Act (IRA), patient advocates and the biotech industry are working to navigate downstream negative impacts on patient access to the drugs they need.
During the Biotechnology Innovation Organization Patient Advocacy Changemakers Event Panel, Downstream Effects of the IRA, moderator Karin Hoelzer, Senior Director, Patient Advocacy at BIO asked, “How does the Inflation Reduction Act lead to formulary restrictions, with more utilization management? Why has the IRA made it harder for patients—and seniors in particular—to get access to the therapies that they need?”
To begin to answer that question, the panel first addressed how the IRA has played out in the last three years.
As Jennifer Snow, Founder and Managing Director at Apteka explained, there were a few provisions in the IRA that are helpful for patients, including for instance a $35 out-of-pocket cap on the cost of insulin, an annual out-of-pocket limit of $2,000 for beneficiaries with Medicare Part D coverage (a cap which will increase to $2,100 in 2026), the introduction of the medical prescription payment plan (MPPP) that allows beneficiaries to spread the out-of-pocket costs out over the plan year, and $0 copays for most adult vaccines.
However, as the panelist explained, in other ways the law hinders patient access. Much of the attention has so far been given to the IRA’s problematic price control provisions, but patients have also been harmed by other aspects of the legislation, panelists explained.
What the IRA means for seniors
“One of the key issues is the way that the plan liability works,” Snow explained. The amount a Medicare Part D beneficiary has to pay out-of-pocket for covered prescription drugs varies throughout the plan year. Standard Part D benefit designs have three “coverage phases.” During the initial “deductible phase,” the beneficiary hasn’t met the annual deductible yet and is therefore usually responsible for 100% of the drug cost. In the “initial coverage phase,” after the deductible is met, the beneficiary is usually responsible for a copayment or coinsurance. And with the IRA changes, once the beneficiary hits the “catastrophic phase”—$2,000 in out-of-pocket costs for 2025—the patient pays zero dollars for covered drugs.
“In the ‘catastrophic phase’ before, Part D plans were responsible for 15% of the cost, now they’re responsible for 60%.” Explained Snow. As a result, plans now face increased drug cost liability and have responded with higher premiums and more cost-sharing. “So there have been notable changes to the Part D design.”
Everyone is starting to see, and feel, the consequences. As Snow observed, premium increases are starting to take effect.
“It’s somewhat muddled by the Medicare Part D premium stabilization demonstration project that was implemented for the standalone Part D prescription (PDP) drug plans,” said Snow, “but in general, I think we’re in an unsustainable trend for the standalone PDP premiums.”
How the IRA limits patient access
Increased premiums aren’t the only levers PDP plans use to manage drug cost liability. “We have fewer branded drugs being on formularies year over year over year,” said Snow. “And then we also have much tighter utilization management.”
Specifically, Snow observed how, in many cases, almost 50% of branded drugs are on prior authorization for plans. For reference, back in 2011, that number was closer to 30%. In fact, according to a 2024 Medicare Access for Patients Rx (MapRX) survey of Part D plan sponsors, 93% of respondents considered increasing utilization management for specialty medications and 73% considered narrowing their formularies. According to another analysis of the most commonly used Medicare Part D drugs, the 77 analyzed drugs experienced increases in all formulary and utilization management measures from 2024 compared to 2020.
Prior authorization and other utilization management is often delaying patients’ access to care because patients and their providers must jump through more and more hoops just to get access to the treatment they were originally prescribed.
And what does the increase in prior authorization and tightening of utilization management mean for patients? As Daneen Sekoni, Vice President of Policy and Advocacy at the Cancer Support Community, explained, for the cancer community in particular, formulary changes resulting from IRA price controls are a big and growing concern. For many cancer patients, fast access to covered drugs is lifesaving.
What’s more, the added stress and worry associated with prior authorization can be harmful. “There’s a lot of evidence out there that shows that financial toxicity is particularly acute in patients that have an oncology diagnosis,” said Sekoni. “When you add on the stress of the shared decision making (that patients make with their physician), that this treatment is the right treatment for you, but then the insurer is telling the patient, ‘Before you get this treatment, we want you to do something else to get that treatment, or you may not get that treatment because it’s not in a formulary, and there’s an alternative,‘ that creates anxiety.”
And on top of that, patients are still paying more for access to drugs, not less, as was intended.
“What we are seeing now already, is that out-of-pocket costs for cardiovascular patients that are on these medications are going up in the Medicare population,” said Ryan Gough, Executive Director at the Partnership to Advance Cardiovascular Health. “The financial burden now is more on PBMs (pharmacy benefit managers) and the plans, and they have to make up that difference somewhere. So what are they going to do? They’re going to increase out-of-pocket costs on patients.”
And as patients are paying more out-of-pocket for the treatments they need, that may ultimately mean more patients abandoning their prescriptions and foregoing needed treatments. Reducing treatment adherence for cardiovascular drugs like anticoagulants significantly increases patients’ risk of major cardiovascular events and death.
It is safe to say that this goes against the original intent of the IRA price controls, making the effects of the controls antithetical to the spirit of the law.
“The reality is that any potential decrease in costs is not being passed on to patients,” Gough said.
When it comes to the downstream effects of the IRA, the panel focused on two other reimbursement-related issues that risk limiting patient access. Starting in January, implementation of the first “negotiated” prices will increase the strain on community pharmacies. Moreover, Part B drugs, which are administered in the healthcare provider office, will become part of the government price setting. The resulting strains on infusion clinics and physician offices will grow—all access issues that are particularly hard on rural and historically underserved patient populations.
Community pharmacies taking a hit
One group that is taking a hit is community pharmacies.
“Before this program, under Medicare Part D, pharmacies were paying their wholesalers, on average, about once every two weeks for drugs and were getting reimbursed by the PBMs, and under Medicare Part D’s prompt payment requirements, about once every 14 days for electronic submissions from the date of the claim submission,” explained Steve Postal, Senior Director of Policy and Regulatory Affairs at the National Community Pharmacists Association.
“Now under this new program,” he continued, “there’s an additional component, which is like a refund amount or a true-up coming from the manufacturers.” Unfortunately, many of the details about how this refund will work and how it will be managed are still being worked out.
And, there are other key pieces of the puzzle that pharmacies do not know yet.
“Payment currently is undefined,” Postal says. “Most of our members, when we recently surveyed them, haven’t finalized their contracts with PBMs and plans, so that side of the payment is currently undefined for these drugs. We’ve advocated to CMS that PBMs and plans should be paying the pharmacies no less than the CMS’ “negotiated” maximum fair price (MFP) of the drug, and a commensurate dispensing fee in line with Medicaid fee for service.”
So, what does this mean for patients? It isn’t good.
“We’ve surveyed our membership,” explained Postal. “We got about 400 respondents, about 86% said that because of the payment uncertainty and estimated delays in payment, they are either considering not stocking one or more of the drugs or have already decided to not stock one or more of these drugs.”
So because pharmacies can’t guarantee they will be able to cover any shortfalls between their acquisition cost and MFP, patients are faced with barriers to access. The “negotiated” drugs are, by definition, some of the most widely used drugs among Medicare beneficiaries, and the issue is likely to be particularly difficult to navigate for seniors living in rural communities.
“A lot of our members are in rural areas and are underserved generally,” explained Postal, continuing that a number of pharmacies have been forced to close their doors because they can’t cover costs, and if an independent (or even a large chain) pharmacy closes its doors in a rural area “it’s very unlikely that somebody is going to pick up that business and open it back up again, because it’s a huge challenge to begin with,” said Postal. “So, yeah, it goes back to access issues.”
Part B and patient access
To date, IRA drug price negotiations have been limited to Part D drugs, but this is going to change soon. Part B drugs, which are administered in the physician’s office, will become “negotiation” eligible soon, with the “negotiated” prices taking effect in 2028. As Bio.News explored in a recent coffee chat, the fact that these drugs are reimbursed differently will create additional access barriers. Provider reimbursement for Part B drugs is often tied to the drug cost—most commonly reimbursing providers at the rate of the Average Sales Price (ASP) plus a 6% add-on payment to cover overhead cost.
“What’s going to happen is that eventually there’ll be Part B drugs that are going to be negotiated, and that really messes with the provider end of things,” said Snow. “It’s going to change the way providers are paid (under the traditional) buy-and-bill model. It’s going to delay that payment. It’s potentially going to change patient access in terms of the availability of products, the availability of types of care, dynamics with 340B are going to play a role; it all becomes a lot messier.”
What do we do?
Panelists highlighted a number of policy solutions to address. Many that are familiar to the patient advocacy community. Two pieces of legislation in particular were the Ensuring Pathways to Innovative Cares (EPIC) Act, and the Maintaining Investments in New Innovation (MINI) Act.
The price controls under the IRA have not only jostled the payer landscape in recent months, but have also proven to chill innovation in the small molecule space and in particular with regard to the development of genetically targeted technologies (GTTs) which are considered “small molecule” drugs under the law.
The EPIC Act, in part, aims to align the timeline for which small molecule drugs like pills and capsules and large molecule drugs like biologics would be protected from Medicare drug price negotiation implementation following FDA approval, as Sekoni explained.
The MINI Act, on the other hand, would distinguish GTTs from small molecule drugs and instead align them with biologics, therefore extending the time frame for protection from Medicare drug price negotiation implementation from 9 years to 13 years post-approval.
Beyond these two specific pieces of legislation, panelists agreed on the importance of advocacy—ensuring that decision-makers understand how these policies impact patient access, and giving patients a voice in this discussion.
