IRA Could Save Seniors $400 PY in Rx Drug Costs

The Department of Health and Human Services (HHS) released a new report projecting that nearly 19 million seniors may save about $400 per year on prescription drug costs when the $2,000 out-of-pocket prescription drug spending cap from the Inflation Reduction Act (IRA) goes into effect in 2025.

Whether the nation’s seniors actually see those savings, however, depends on several factors that may thwart the IRA’s intent, including industry pushback and efforts by managed care stakeholders to undermine the legislation.

The report analyzed the possible effects the IRA, which allows Medicare to negotiate prescription drug prices, as well as capping the cost of insulin at $35 per month, could have on seniors with Medicare insurance. According to the HHS report, the law’s changes to the Medicare Part D program may reduce out-of-pocket spending by nearly $400 for more than 18.7 million enrollees when the provisions are implemented in 2025. Among this population, nearly 1.9 million enrollees are projected to save at least $1,000 in 2025, the report noted. Once all the provisions modeled in this report go into effect in 2025, they could result in an estimated $7.4 billion total reduction in annual out-of-pocket spending.

“High-cost prescriptions should not be a barrier to care for our nation’s seniors,” Tom Kraus, the vice president of Government Relations at ASHP, told Pharmacy Practice News. “ASHP has long supported caps on Part D spending. This report confirms our belief that this type of protection is a needed step for millions of Medicare patients.”

An Uphill Battle?

Bonnie Kirschenbaum, MS, a consultant and expert in reimbursement, agreed that the IRA spending cap could help reduce prescription costs for seniors. However, she stressed that the program could be derailed before it goes into effect. Several manufacturers, such as Merck and Bristol Myers Squibb, as well as industry groups, including the Pharmaceutical Research and Manufacturers of America, have filed lawsuits opposing the program, she noted. In addition, payors, pharmacy benefit managers and manufacturers are trying to make formulary deals that could move “prescribing away from the negotiated price drugs to preferred ones without this type of pricing,” Ms. Kirschenbaum said. Those deals are similar to actions taken in the biosimilar space that encourage the continuation of reference products over biosimilars.

“If implemented in a timely fashion in 2025 and not derailed or stalled by myriad legal challenges, it will be the first legislation that attempts to negotiate drug pricing for Medicare patients,” she said. However, the initial negotiations will be on a “very limited number of products that expands in subsequent years.

“Unfortunately, lots of issues stand in the way that may stall this much needed drug spend relief,” she added. “So, it remains to be seen what benefit actually trickles down to the patient.”