Part D Changes in Inflation Reduction Act Could Lead to Tighter Formulary Management

  • Aug 18, 2022

    In a major win for Democrats facing midterm elections in the fall, the Biden administration this month passed the Inflation Reduction Act, a $430 billion-plus spending package that contained some of the president’s key priorities for climate, drug pricing and tax reform. While the legislation made headlines for allowing Medicare to negotiate the prices of certain drugs, industry experts say it’s changes to the Medicare Part D program that have the greatest potential to save seniors money and to force plans to rethink their management of the drug benefit.

    The Inflation Reduction Act of 2022 (H.R. 5376) passed along party lines in both chambers and was signed into law on Aug. 16. It includes $369 billion to fight climate change, imposes a 15% corporate minimum tax and extends enhanced Affordable Care Act subsidies for another three years. Notable among the other health care provisions, the law requires CMS to negotiate the prices of prescription drugs, starting in 2026 with 10 Part D-covered drugs (including highest cost drugs and biologic agents, excluding “small biotech drugs” and certain orphan drugs to treat only one rare disease or condition). That number will increase to 15 in 2027 and 2028 — when Part B covered drugs may be included in the list of drugs subject to negotiation — and will rise to 20 agents in 2029 and beyond.

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  • Lauren Flynn Kelly

    Lauren has been covering health business issues, including drug benefits and specialty pharmacy, for more than a decade. She served as editor of Drug Benefit News (the predecessor to Radar on Drug Benefits) from 2004 to 2005 and again from 2011 to 2016, and now manages Radar on Medicare Advantage. Lauren graduated from Vassar College with a B.A. in English.

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