As CMS Releases IRA-Negotiated Prices, Payers Already Have Made Changes

While the Inflation Reduction Act (IRA) had multiple provisions affecting a variety of industries, including energy, agriculture and manufacturing, the prescription drug aspects of the law have arguably gotten the most attention, both positive and negative. While some of those provisions have already gone into effect, today CMS released the eagerly anticipated negotiated prices for the first 10 drugs, which will go into effect on Jan. 1, 2026. But both Medicare and commercial plans have begun to modify their drug management approach in preparation for the law’s potential impact, according to research from Zitter Insights.

Among the pharma provisions of the IRA, which was signed into law by President Joe Biden on Aug. 16, 2022, are requiring Medicare to negotiate the prices of the most expensive Medicare drugs, starting with the top 10 Part D agents; sanctioning companies whose Part B drugs’ prices increase faster than the rate of inflation; and implementing a phased-in Medicare Part D redesign that modifies the percentages different stakeholders are responsible for and caps beneficiaries’ out-of-pocket costs at $2,000 starting next year.

While the negotiated prices for the first 10 drugs do not go into effect until 2026, the negotiation process itself started on Oct. 1, 2023, and ran through Aug. 1. Although CMS was required to publish the negotiated maximum fair prices by Sept. 1, the agency revealed those two weeks early.

Those prices for a 30-day supply are as follows:

• Eliquis (apixaban) from Bristol Myers Squibb and Pfizer Inc.: $231.00 vs. $521.00 in calendar year 2023, a 56% discount from the 2023 list price;
• Enbrel (etanercept) from Amgen Inc.: $2,355.00 vs. $7,106.00, a 67% discount;
• Entresto (sacubitril/valsartan) from Novartis Pharmaceuticals Corp.: $295.00 vs. $628.00, a 53% discount;
• Farxiga (dapagliflozin) from AstraZeneca: $178.50 vs. $556.00, a 68% discount;
• Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen and NovoLog PenFill (insulin aspart) from Novo Nordisk: $119.00 vs. $495.00, a 76% discount;
• Imbruvica (ibrutinib) from the Janssen Pharmaceutical Companies of Johnson & Johnson and AbbVie Inc.: $9,319.00 vs. $14,934.00, a 38% discount;
• Januvia (sitagliptin) from Merck & Co., Inc.: $113.00 vs. $527.00, a 79% discount;
• Jardiance (empagliflozin) from Boehringer Ingelheim and Eli Lilly and Co.: $197.00 vs. $573.00, a 66% discount;
• Stelara (ustekinumab) from the Janssen Pharmaceutical Companies of Johnson & Johnson: $4,695.00 vs. $13,836.00, a 66% discount; and
• Xarelto (rivaroxaban) from the Janssen Pharmaceutical Companies of Johnson & Johnson: $197.00 vs. $517.00, a 62% discount;

Between Jan. 1, 2023, and Dec. 31, 2023, about 8.8 million of the 54 million Medicare Part D beneficiaries took these drugs, accounting for $56.2 billion in gross prescription drug costs. CMS says that if the negotiated prices had been in effect last year, they would have saved an estimated $6 billion in net covered prescription drug costs.

For the Inflation Reduction Act Special Report: Q1 2024, from Feb. 23, 2024, to March 12, 2024, Zitter Insights polled 29 commercial payers covering 105.7 million lives, 33 Medicare payers covering 44.9 million lives, 50 physicians and 50 oncologists about the provisions of the IRA and their potential effects.

AIS Health and Zitter Insights are both divisions of MMIT.

All of the Medicare payers said they had begun to execute internal strategic imperatives for 2025 in preparation for the IRA’s impact. Those with more than half of lives — 52% — said they expected those to be completed by June 2024, while payers with 27% said December 2024, with the remainder not expecting them to be completed by the end of this year.

Medicare payers said that the Part D redesign will be most influential on their management of the number of branded exclusions and the number of generic/biosimilar products on preferred tiers, followed by the use of prior authorizations and step therapies.

Medicare payers covering 99% of lives said they expect that the redesign will lead to an increase in member premiums. Those representing 78% of lives — compared with 57% in a survey the previous year — said they will consider leveraging a skinnier formulary by focusing on certain therapeutic areas, with migraine and diabetes cited as the top nononcology conditions. Breast cancer and non-small cell lung cancer were the top oncology conditions.

Payers representing more than three-fourths of Medicare covered lives said they plan to advantage/pursue products with a lower wholesale acquisition cost, compared to those with 22% of beneficiaries that said they will advantage products with a higher WAC and higher rebates.

In negotiations with manufacturers next year, Medicare payers said the top two items they are seeking are lower total/net costs and increased contracting/pricing strategies.

With respect to the $2,000 patient out-of-pocket cap, Medicare payers with 22% of lives said they expect an increase in the use of all branded products in general, while those with 56% of beneficiaries said they expect the use of high-cost specialty drugs to rise.

Payers with 29% of Medicare covered lives said the IRA will have a high or very high impact on their management of pipeline and newly launched agents. That is down from those with 54% of lives that responded the same way for an IRA report conducted from March 2, 2023, to March 31, 2023, when Zitter Insights polled 29 commercial payers covering 100.2 million lives, 32 Medicare payers covering 40.5 million lives, 100 physicians and 67 oncologists.

In that older survey, commercial payers covering more than three-quarters of lives said they expect to incorporate IRA-driven changes into their commercial line of business, with the majority of those respondents saying they anticipate that happening within two to three years (see chart).

By the time of the newer survey, payers with 21% of lives said they already had incorporated changes into their commercial line of business.