Medicare Part D Redesign Will Sharpen Policy Focus on Protected Classes

  • Jul 06, 2023

    Upcoming changes in the Medicare Part D benefit that involve increasing the risk borne by insurers in the catastrophic phase may boost pressure on plans to control costs in the six protected classes, and manufacturers are worried about what that might lead to.

    Under the Inflation Reduction Act, Part D plan obligations for drug costs will increase from 15% to 60% in the catastrophic phase beginning in 2025, while Medicare’s will decrease from 80% to 20% for brands.

    Manufacturers will supplement coverage in the catastrophic phase with a new 20% mandatory discount on brands but plans are still expected to look for ways to lower drug spending because they won’t be able shift costs to enrollees in the usual ways. As part of the redesign, cost sharing will be capped at $2,000 a year and annual premium increases will be limited.

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  • Cathy Kelly

    Cathy is a senior writer with Pink Sheet and has covered U.S. regulation and reimbursement policy for the biopharma industry since 2004, starting with the establishment of the Medicare Part D program. Since then, she has written extensively about developments in all major sectors of the U.S. insurance market (Medicare, Medicaid and commercial plans). She has covered key legislation affecting biopharma, including the Medicare Prescription Drug, Improvement, and Modernization Act which created Part D, health care reform under President Obama, and the Inflation Reduction Act. She has closely followed the increasing influence of pharmacy benefit managers and their use of formulary negotiations and rebates to control pricing. Cathy also has covered developments in health technology assessments and has monitored industry progress on novel drug contracting that reflects value-based pricing.

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