Inflation Reduction Act’s impact on the healthcare industry
The Inflation Reduction Act will impact various elements of health care, with the most significant being a true out-of-pocket cap in Medicare Part D (Drug Coverage) and drug price negotiations within Medicare.
- Medicare Part D plan reforms include the $2,000 out-of-pocket (OOP) cap with a mechanism to smooth patient OOP costs more evenly on a monthly basis starting in 2025. Additionally, patient OOP costs will be capped in 2024 at the catastrophic threshold and all low-income-subsidy enrollees will enjoy the full benefit of the program.
- Manufacturers must pay a mandatory rebate if drug prices increase faster than inflation for certain Part B and Part D drugs. Failure to comply with the drug-rebate requirements will subject manufacturers to strict penalties.
- The legislation will also implement negotiations on drug prices in Part B and Part D via the Medicare Drug Price Negotiation Program. The program focuses on single-source drugs with high utilization within Medicare and will apply to certain drugs in 2026 through 2029 and beyond.
- Biosimilar reimbursement in Part B is also changing. As of October 2022, providers are reimbursed the Average Sales Price (ASP) of the biosimilar plus 8% of the ASP of the reference product.
- The Affordable Care Act subsidies to purchase insurance on the exchanges or marketplaces are extended through 2025.