Prescription Drug Price Regulatory Changes
On August 12th, 2022, the Inflation Reduction Act went into effect. As inflation continues to rise throughout the United States, the act calls for a significant reduction in prescription drug pricing. Various implications come along with the new federal drug price as it moves across healthcare systems.
Three Provisions
A recent webinar panel discussed three major changes in prescription drug pricing:
- Price negotiation – This allows the government to regulate certain drugs under Medicare and the Drug Price Negotiation. This pushes the government to establish a maximum fair price (MFP) for certain prescription drugs. As a result, H.R. 3 requires the Secretary to consider research and development costs, market data, production and distribution costs, and therapeutic alternatives.
- Inflation penalties – Pharmaceutical manufacturers must pay rebates on drugs covered by Medicare Part B and Part D if the drug price rises faster than the inflation rate.
- Medicare Part D – This creates a $200,000 out-of-pocket cap on Part D prescription drug spending.
Industries Affected
Due to the creation of this revision, there are five key sectors of the healthcare system that are affected, including:
- Drug manufacturers
- Payers
- Providers
- State Medicaid agencies
- Patients
Deduction Of Manufacturer’s Revenue
Drug manufacturers not subject to negotiation will see a decrease in revenue as others choose to decrease their prices. Due to inflation caps, price increases will be limited. A significant benefit of these regulatory changes will be a smaller out-of-pocket cost for consumers.
Medicare Part D Cap
The regulations have established that Part D beneficiary premiums are capped for 2024 through 2029. In addition, there will be an annual beneficiary cost-sharing cap effective in 2025. This will also eliminate catastrophic beneficiary cost-sharing for 2023 and 2024. The negotiated drug prices and inflationary rebates may reduce Medicare Advantage plan costs for Part B drugs.
The Impact GMS Has On Your Business
As a business owner, you want to ensure that your benefits plan continues to get you the lowest rates. When you partner with GMS, you gain access to an Rx Specialist who can support you and your employees find the most cost-effective option. Additionally, we offer control of premiums, access to data and networks, and options you can’t find elsewhere. Learn more today!