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

Aug 18
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 since the early 2000s and specializes in in-depth reporting on Medicare Advantage, managed Medicaid and Medicare Part D. She also possesses a deep understanding of the complex world of pharmacy benefit management, having written AIS Health’s Radar on Drug Benefits from 2004 to 2005 and again from 2011 to 2016. In addition to her role as managing editor of Radar on Medicare Advantage, she oversees AIS Health’s publications and manages the health editorial staff. She graduated from Vassar College with a B.A. in English.