IRA & The Medicare Drug Price Negotiation Program
Research demonstrates how the IRA's drug pricing provisions can impact patients.
Statement from NPC's John O'Brien on CMS Announcement of Maximum Fair Price
August 15, 2024
"CMS told us the prices they’ve set for drugs millions use to stay healthy. We don’t yet know, in spite of what they said, what the impact for patients at the pharmacy counter will be. They didn’t offer specifics about what evidence they used, if they listened to patients or clinicians, or how they’ll protect patient access or out-of-pocket spending. And when they do it may be too late to inform the next round.
CMS’s actions impact the entire market, and can affect prices charged by private insurers and investment decisions in new medicines. Our research suggests the IRA will reduce the number of conditions new medicines are approved to treat and limit post-approval research used to establish treatment guidelines, while encouraging plans to limit access. We’ll be watching what happens over the coming months and conducting new research about the impact of this law."
NPC is driving research that can help stakeholders understand the unintended consequences of the IRA.
Read below for NPC's overview of recent studies and what the findings say about the Medicare Drug Price Negotiation Program's impact on patient access to treatments.
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Research Overview
Potential Unintended Consequences of the Inflation Reduction Act’s Medicare Drug Price Negotiation Program for Patients
Provisions of the Inflation Reduction Act (IRA) could affect patients who rely on innovative treatments, cures, or new uses of existing medicines to get well or stay healthy. While some parts of the IRA will help patients — such as caps on out-of-pocket payments and the ability to predictably spread payments over the year — there are growing concerns about the potential unintended consequences of the IRA and the Medicare Drug Price Negotiation Program (DPNP). Recent research showed that:
The IRA may delay access to brand new medicines
Before a new drug is approved, research is done to determine whether a drug will be effective in treating more than one disease. Because the IRA starts a countdown clock toward price-setting based on when it is first approved by the FDA, the law creates an incentive to wait to launch a new drug until multiple indications are ready for approval at the same time. Patients may have to wait longer to get access to new medicines.
- Go Deeper: Read the peer-reviewed research in The American Journal of Managed Care.
The IRA may lead to fewer diseases getting additional approved treatment options
The timeline for the research and clinical trials required for the FDA to approve an existing medicine for another disease often goes beyond seven years. Now that the IRA allows the government to select some drugs for price-setting just seven years after launch, it reduces the incentive to conduct additional research and development. Patients may see fewer diseases getting new treatment options approved.
- Go Deeper: Read the peer-reviewed research in The American Journal of Managed Care.
The IRA may reduce the amount of available information used by providers to establish clinical guidelines
After a medicine is approved, it takes a long time to generate the evidence that clinicians and providers rely on to help establish guidelines and best practices to treat diseases. The IRA’s short timeline to potential price-setting reduces the incentives to generate this evidence. Providers may know less about the benefits of new medicines.
- Go Deeper: Read the publication in Health Affairs Forefront.
The IRA may encourage insurers to restrict access for the selected drugs
What a patient pays for a medicine is a function of the insurance card in their pocket. Insurers also determine whether patients must navigate barriers such as prior authorization or step therapy. Right now, seniors have excellent access and experience few barriers to many of the first ten drugs selected — but that may change. Increased utilization management requirements, which are likely in response to the IRA, could reduce patient access — exactly the opposite of what the program intends to do.
- Go Deeper: Read the peer-reviewed research in JAMA Health Forum.
The IRA may not incorporate or account for the patient perspective
People living with diseases ought to be a critical voice in a process that is supposed to help them. The final guidance from CMS was not clear on how patient preferences will be incorporated into their decisions. Failing to incorporate the patient voice threatens access and continued innovation.
- Go Deeper: Read NPC's analysis of CMS' Patient-Focused Listening Sessions published in Value in Health.
- Also read about considerations for CMS, manufacturers, and the HEOR community in Value in Health.
Comment Letters
Read NPC's comment letters on CMS' implementation of the IRA's drug pricing provisions.
| NPC Submits Comments to CMS on Draft Guidance for the Medicare Drug Price Negotiation Program for 2027 | Read Now |
| NPC Comments on CMS' Drug Price Negotiation Counteroffer Information Collection Request | Read Now |
| NPC Comments on CMS Information Collection Request for Negotiation Data Elements | Read Now |
| NPC Comments on CMS Medicare Drug Price Negotiation Program | Read Now |
News and Commentary on the IRA
| Time for an ‘honest conversation’ about drug pricing, O’Brien says | Listen Now |
| It’s time to stop talking past each other on drug pricing | Read Now |
| Three Takeaways from CMS's Patient-Focused Listening Sessions: Toward Improved Patient Engagement | Read Now |
| NPC’s John O’Brien Talks IRA, Drug Pricing, Patient Costs & Access on The Real Chemistry Podcast | Learn More |
| Addressing Critical Ambiguities in CMS’s Drug Evaluation Process | Read More |
| Getting Patient Input Right During the IRA Implementation | Read More |
| NPC Shares Input on CMS’ Data Collection Requirements | Read More |
| The President’s victory lap on the success of price controls is premature | Read More |
For NPC Members
The Centers for Medicare and Medicaid Services (CMS) received almost 200 comment letters on their initial Guidance regarding the implementation of the Medicare Drug Price Negotiation Program under the Inflation Reduction Act (IRA). Learn what stakeholders had to say in NPC’s July 2023 analysis.