At the Pharmacy Quality Alliance (PQA) 2023 Annual Meeting, a patient joined a panel to give insight into the challenges of living with a chronic illness and what he sees as the pros and cons of the Inflation Reduction Act (IRA).
In the closing general session at the Pharmacy Quality Alliance (PQA) 2023 Annual Meeting, panelists dove deep into the implications of the Inflation Reduction Act (IRA) on medication access and affordability.
To kick off the session, Corey Ford, MHA, vice president of reimbursement and policy insights at Xcenda Consulting, gave a brief overview of the implementation of the IRA and its 5 core components related to health care: Part D reforms, inflationary caps, Medicare negotiation, biosimilars, and Affordable Care Act (ACA) subsidies.
Starting in 2026, there will be negotiations for drug pricing within Medicare Part D and B, and a rebate penalty will be imposed on drug prices that outpace the rate of inflation. CMS is set to release the 10 drugs it plans to negotiate on in September 2023, and if manufacturers fail to enter these negotiations, an excise tax will be imposed. Ford said the outcome of these negotiations will be a fair price for the product, which will be the negotiated price of the drug in Part B or D moving forward.
The IRA also includes the extension of ACA subsidies through 2025, which Ford said is vital to maintaining access to health insurance for Americans. There will also be an increase in Medicare Part B reimbursement for biosimilars and a complete redesign of the Medicare Part D benefit. By 2024, a patient will no longer have out-of-pocket (OOP) costs once they reach catastrophic coverage, an expansion in the Low-Income Subsidy (LIS) will be established, and the insulin copay tax and $0 OOP costs for Part D vaccines will take effect. By 2025, a true OOP cap of $2000 will be put in place.
Expanding on the LIS, one significant change is the inclusion of it within the manufacturer liability for the coverage gap discount program. While this change is expected to be beneficial for patients, there will be a transition period for manufacturers to adjust. Additionally, manufacturers with sales below a certain threshold from a Medicare Part D perspective will also have a transition period to the new benefit design. Another notable change is the insulin copay caps set at $35 per fill, which applies to the entire Medicare Part D market.
While the IRA is expected to be beneficial for patients, Ford noted that there are still concerns about affordability for those on a fixed income, and that there may be additional affordability challenges that patients could still face under the new benefit design.
Following this IRA overview, Ford was joined onstage by Gregory Daniel, PhD, MPH, vice president of global public policy, Eli Lilly & Company, and Marissa Schlaifer, MS, RPh, vice president of policy at Optum Rx. The panel was led by Ceci Connolly, MA, president and chief executive officer of the Alliance of Community Health Plans (ACHP).
Also joining the panel was George Valentine, a 71-year-old patient living in Texas who retired in 2019 after 40 years of work in information technology. In 2002, Valentine received a diagnosis of chronic lymphocytic leukemia (CLL); he also has type 2 diabetes. Currently taking 20 different pills a day and seeing 10 doctors, Valentine said nearly 40% of his fixed income goes towards medical expenses each year.
“When I hear ‘the Inflation Reduction Act is going to lower your drug costs,’ I say that's a great start,” Valentine said. “But there's a much bigger bucket of costs and things that have to be looked at to make a real impact on a patient with chronic condition.”
Daniel discussed the challenges the industry sees with CMS' way of interpreting which drugs meet the thresholds for being eligible for price negotiations. Historically, in the United States, in the oral medication space, generics flooded the market once a product lost its exclusivity. However, with the advent of biosimilars, competition is increasing in the biologic space as well, changing the revenue perspective.
The IRA further complicates matters because it puts the clock of Medicare price negotiations into this dynamic. Under the IRA, small molecules are eligible for negotiations 9 years post approval, and biologics after 13 years. But CMS has interpreted the eligibility for negotiations to be triggered by the original approval only; if an oncology therapy is studied in a new population beyond its original indication, Daniel said, "None of that counts."
Schlaifer then spoke about the implications of the IRA on access and affordability from a plan perspective. Some benefits include increased affordability for beneficiaries and improved medication adherence, resulting in better health outcomes. However, the IRA also has consequences for the industry, particularly for smaller Medicare Part D plan sponsors. While the financial liability for this benefit very much decreases for CMS, the amount that the Medicare Part D plan sponsor needs to pay—especially for high utilizers—dramatically increases. For smaller plans, this is a serious concern as they may not have the operational flexibility to manage this increase in financial liability.
“We have a lot of concerns of what that may mean for consolidation in the industry, potentially for small plan sponsors having to exit certain markets,” Schlaifer said. “I think that's something we need to think about, and that's a big concern.”
Regarding the financial responsibility shift that will result from the new CMS guidance on inflation reduction, Daniel explained that pharmaceutical companies have been focused on negotiation strategies and have not yet addressed additional liabilities resulting from the shift. Meanwhile, plans will have significantly more liabilities, leading to questions about plan management and benefit design. With the lack of clarity in the CMS guidance, it remains unclear what will happen to coverage and access, and how benefit designs will adapt to the shift. Ultimately, the challenge is to determine where the money will come from and how to ensure access to needed medications for patients.
There are also concerns from the patient perspective. Building on what he’s already mentioned about the high costs he faces, Valentine expressed his worries with the IRA, noting that his case of CLL has already outpaced the medications he is taking, and that there are new drugs in trial that could be more effective. However, with the increasing costs, he is concerned about access to those drugs and the potential for formulary exceptions. He also mentioned that his Part D premium is already at $250 a month, and with a 6% increase each year for the next 5 or 6 years, it will be difficult for other patients on fixed incomes to bear the additional costs.
“Do you think industry would have voluntarily taken these steps to reduce the cost of medication?” Connolly asked.
Ford answered that manufacturers have taken steps such as offering discounts and rebates to private parties and plans to help alleviate some of the financial burden. These negotiations between manufacturers and plans have been ongoing since the beginning of benefit, and while it's difficult to predict the future, he said it's worth noting that manufacturers have already been providing financial support in the Part D program. Ford's comments suggest that, while there are still concerns about the implementation of the Inflation Reduction Act, manufacturers have taken steps to help mitigate the financial impact.