Expert Breaks Down Impact of IRA on Drug Prices and Patient Access

Sarah Butler, chief commercial officer at ADVI Health, discusses the substantial impact that the Inflation Reduction Act will have on drug prices and patient access to medications. She explains how some negotiated drug prices under the new law may end up higher than current out-of-pocket costs for patients. She also reviews the potential outcomes of the upcoming election in expanding Medicare drug price negotiation or pursuing international pricing models. A key focus is on the critical role of pharmacists in educating patients about changes to copays through programs like copay smoothing, as well as ensuring affordable options are accessible.

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Q: How do you see the Inflation Reduction Act and price negotiation for Medicare impact access to new medications for patients?

Sarah Butler: The inflation Reduction Act is going to have a substantial impact on the cost that patients may pay for their medications. In terms of new medications, that's TBD. Right now, right? The first 10 drugs that were selected were not new medications. They're going through the negotiation process now. We will know what those prices are in September. Some of the things that we're helping our clients think through though is if the manufacturer negotiated price ends up being higher than the amount that the patient was paying after rebates, we may see some interesting situations where patients could potentially pay more out of pocket for negotiated drugs. Clearly, I don't think that was CMS is intent, but it's something that we're watching. The other thing to think about is the plans are required to cover those drugs in Medicare, at least, they're required to cover the drugs. But all conversations with CMS right now have focused on price, price of the drugs, not access. So you could see plans, put them on really restrictive tiers very high tiers with some restrictive benefit design and utilization management. So kind of this without rebate world, we don't know exactly what accessible look like for patients yet.

Q: Currently, what are some of the biggest challenges for patients managing cost of medication, and how can the out-of-pocket spending cap help to mitigate these costs?

Sarah Butler: I think the latest survey that I saw, over 74% of Americans are worried about an unexpected medical cost and not being able to pay it. Prescription drugs are actually only a small portion of medical costs in this country, but seniors especially do think about it, especially those that are on a fixed income, the Part D out-of-pocket cap that will go into effect in 2025, that's an out of pocket cost at $2,000. That's still a lot of money for many Americans to pay every single year for their treatments, but it's a huge improvement versus what they've been paying today. Now it's over $7,000, before you hit the doughnut hole, and then you're in the doughnut hole and Part D, so it's a substantial improvement. I think this will be the first election in a while that we're not talking about an out-of-pocket cap. So I do think seniors will see some relief pretty substantially in 2025.

Q: How could the upcoming election impact the Inflation Reduction Act and other policies regarding medication access and drug prices?

Sarah Butler: In terms of how the election will impact IRA and drug pricing, it's going to be substantial, whether we've got a Biden administration or a Trump administration. Now, if have Biden, we know that he's already planning to expand the IRA, the portion that focuses on Medicare drug negotiation. Currently, the legislation has 10 drugs per year, he's already said at the State of Union, he'll expand that to 50 drugs per year. So that's already on the radar of pharma manufacturers. If we have a Trump administration, what we've heard from the Trump campaign, is that it will likely be looking at going back to most favored nation or an international pricing index, because Trump has been very focused on wanting to make sure that Americans are not getting the short end of the deal, so to speak, and are paying the same for their drugs that we see other countries paying overseas.

Q: nother topic covered in the session is economic stress. How can pharmacists best support patients who are struggling to maintain medication adherence due to the cost of medication?

Sarah Butler: The pharmacists are going to play a really critical role. There's some changes that are being implemented under the IRA, that the pharmacists will be at the frontline of, for example, copay smoothing, that's going to change when they actually collect copays for patients. So they'll have to explain this. If I owned a large retail pharmacy, I would want to be educating my pharmacist, so they know how to have those conversations with patients. For patients that can't afford their medications, there's a range of solutions. Manufacturers often offer some free drug programs. Having pharmacists that are aware of how to direct patients to those is great. Obviously, there's other solutions, such as GoodRx, for example, that many pharmacists are now well prepared to handle those conversations.

Q: How can pharmacists and other health care providers collaborate with payers to help ensure access and affordability for patients?
Sarah Butler: That's a great question in terms of how you can collaborate with payers to ensure access. I mean, the payer has a lot of power in the scenario, right? They determine access, which is not beyond price, but can the patient actually access the drug? What tier is the drug going to be on? Are there any step edits, prior authorizations required, etc. I think other stakeholders it's critical that they communicate the value of the drug to payers so that they understand which drugs are most critical and important for improving health outcomes for patients, and it's a conversation that I don't see a need ending anytime soon, right? Like we've talked about access and, restrictive benefit designs by payers. I think payers ultimately want to have the best outcomes for their beneficiaries, but there's certainly opportunities to to improve the conversation on this topic.