Medicare Cap Eases Patient Costs as Negotiation Squeezes Practices

The Inflation Reduction Act's (IRA) cap on out-of-pocket drug spending has made cancer care under the Part D benefit more affordable for many Medicare patients, but the same law's price negotiation is adding financial pressure to community oncology practices that could ultimately limit access, according to a panel discussion at The American Journal of Managed Care^®’s annual Patient-Centered Oncology Care® conference.

The session, “Drug Policy and Patient Access,” was moderated by Chelsee Jensen, PharmD, RPh, BCPS, director of formulary management at Mayo Clinic. Panelists were Stacie Dusetzina, PhD, a professor of health policy at Vanderbilt University School of Medicine; Kirollos Hanna, PharmD, BCPS, BCOP, FACCC, FAPO, FHOPA, director of pharmacy at Minnesota Oncology; and Lance Ortega, MBA, BSN, RN, OCN, executive director of clinical operations at Texas Oncology.

Medicare Part D Cap Improves Access to Cancer Drugs

The IRA's Part D changes have largely delivered tangible benefits, according to the panelists. Hanna said Medicare has steadily lowered patients' out-of-pocket responsibility, which now stands at $2100 annually. This new design replaced an old one that included the so-called “donut hole” coverage gap and a catastrophic phase that confused many patients. In addition, patients can opt into a payment plan known as “smoothing” under the IRA that allows them to spread out-of-pocket costs through monthly payments.¹

“Access and affordability has become much greater for Medicare patients,” Hanna said. He noted that patients in government-sponsored plans generally can't use copay assistance and voucher programs, which makes the cap especially important.

Dusetzina, who has spent much of her career studying Part D affordability, said research published shortly before the law passed found that about 1 in 3 patients with a new cancer diagnosis and a prescription for a high-priced drug never filled it, even at some of the country's best cancer centers.

“Huge props to the Inflation Reduction Act for actually providing a cap on out-of-pocket spending,” she said, adding that the benefit extends beyond the patient to family members who may help pay for parents' drug costs.

Jensen said the cap has simplified conversations with patients. “It makes it just so much simpler to avoid talking about the donut hole and explaining all that,” she said, noting that patients will likely hit the cap within the first 2 months of the year.

Why IRA Drug Price Negotiation Strains Community Oncology Practices

Under the negotiated prices, health systems and practices have become the middlemen between the government and manufacturers, Hanna said. Manufacturers can respond by cutting a drug's list price or by paying the standard default refund amount.

Hanna said Medicare price cuts of 30% to 40% on drugs such as ibrutinib (Imbruvica; AbbVie)² will reduce practice revenue. Meanwhile, drugs like palbociclib (Ibrance; Pfizer) and pembrolizumab (Keytruda; Merck) are among the products that drive drug economics. He said the effects are spreading to commercial payers, who may prefer lower-cost alternatives and add step edits and prior authorizations.

Ortega described the cash flow burden practices already faced when they take on the cost of a drug from day 1. When payment can take 30 to 120 days, and reimbursement varies by payer, some drugs generate a small margin, some break even, and others lose money. He illustrated the problem with a hypothetical scenario in that a $10,000 drug is used by 100 patients, which means practices are floating $1 million on 1 drug for a month. Hanna said practices have been promised IRA refunds within 21 to 28 days, but there's little experience with that timeline so far.

Ortega also warned that reducing drug costs typically means reducing reimbursement, which “does impact access to care for our patients, because eventually we would not be able to sustain all the things that we need to do.” Ortega said that legislative and regulatory reform doesn't always translate into meaningful change. “Reform does not equate to action,” he said, pointing to early state pharmacy benefit manager laws with vague language and weak consequences.

Rising Part D Premiums Push Patients Toward Medicare Advantage

Dusetzina said an unintended consequence of the more generous Part D benefit is rising standalone premiums, which is nudging more beneficiaries toward Medicare Advantage, where prior authorization and step therapy are common. Medicare Advantage already covers more than half of beneficiaries,³ and she expects that share to grow. She said she expects premium announcements for open enrollment to be “shockingly high” for the standalone market.

She also flagged alternative funding programs in employer-sponsored plans that carve specialty drugs out of coverage and send patients to third parties to obtain them, sometimes through international pharmacies or manufacturer cash assistance.

“As soon as people hear about it, they're like, that seems like a scam. Well, it is a scam,” she said.

Jensen noted that navigating benefits is difficult even for professionals. “Even [for] me, understanding my health care benefits is so difficult,” said Jensen, who has been a pharmacist for 14 years.

Lawmakers Worried About Premiums

Asked about the most urgent threats, Ortega said, “The most pressing danger to us is really just reimbursement unpredictability.”

Washington could help by investing in education about the many types of insurance, he said, since patients and clinicians alike often don't understand who controls the dollars. He also said practices need a seat at the table as reform takes shape, warning that the burden could shift from payers to practices.

Dusetzina said the lawmakers she has talked to are worried about premiums and whether people have the ability to afford coverage at all.

“As much as we worry a lot about our health systems and our financial viability, the ability for people to pay their bills and make ends meet is really strained right now, and I think it's going to just become more so in the next couple of years,” she said. “I think there is going to be a lot of attention on that, trying to figure out: how do you squeeze that balloon? How do you get more money out of the system to lower those premiums?”

References

1. Doshi JA, Li P, Klebanoff MJ, Lin JK. Inflation Reduction Act provisions and Medicare Part D out-of-pocket costs for specialty drugs. JAMA Health Forum. 2025;6(5):e251387. doi:10.1001/jamahealthforum.2025.1387

2. Mattina C. CMS releases list of 10 drugs subject to price negotiation under IRA. AJMC^®. August 29, 2023. Accessed September 28, 2026. https://www.ajmc.com/view/cms-releases-list-of-10-drugs-subject-to-price-negotiation-under-ira

3. McCormick B. Medicare Advantage hits 32.8M enrollees, 54% of spending. AJMC. August 12, 2024. Accessed September 28, 2026. https://www.ajmc.com/view/medicare-advantage-hits-32-8m-enrollees-54-of-spending