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Medicare Part D Price Negotiations update: Widespread impact on the industry

The Inflation Reduction Act (IRA) and resulting Medicare Part D price negotiations promise widespread impact on the industry. For the first time in history, the government is empowered to negotiate drug pricing directly with manufacturers. 

Price negotiation results for the first ten selections have been announced, and the list of the next 15 selections are scheduled for release on October 1, 2024 (even before the first pricing adjustments go into effect) with pricing to become effective January 1, 2027. Fifteen more drugs are scheduled for 2025 selection and 20 more for 2026. 

Government sources claim savings of $6 million to Medicare and another $1.5 million in patient out-of-pocket costs. Where will those savings come from? 

Lawsuits initiated by individual drug companies and industry groups have made little headway. At least one selected drug company voluntarily cut their price by 75% in advance of the completed negotiations due to political pressures. At least one other faces the introduction of biosimilars soon, which likely would have pushed pricing down even without the price negotiation “invitation.” 

Drug companies will need to evaluate their strategies in the commercial market, including pricing and marketing. Will payers use the opportunity to reevaluate their pricing for the same drugs? Will manufacturers attempt to expand market share in that area at the expense of same class drugs competitors? Only one thing is certain - the coming changes are likely to be widespread and expand far beyond the specific drugs chosen.

Watch our recent webinar Medicare Part D Price Negotiation update to discover insights on:

  • Price negotiations including patient misconceptions on lower out of pocket costs, review of first round price reductions and negotiation benchmarking, and net pricing analysis
  • The impact of changes in patient out-of-pocket costs including insurer billing, the impact of prescription payment plans, and manufacturer feedback
  • A recap of recent activity including lawsuits filed and their results, manufacturer concerns, long-term pharmacy claims, and the future of Part D plan utilization management
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