The Inflation Reduction Act (IRA) passed on August 16th, 2022 brings big changes for the pharmaceutical industry. On August 31st we had a live discussion on the law’s anticipated impact. Here is a summary of our discussion:
The intent of the law is to impose penalties on manufacturers who raise drug prices faster than inflation. Penalties will begin very soon; however, recent Consumer Price Index (CPI) inflation rates allow increases of around 13.5% without any penalties assessed. Manufacturers are anticipated to increase launch prices to make up for lower annual price increases.
Health and Human Services (HHS) will select up to 60 Part D/ Part B drugs for negotiation in the next few years. Selected drugs must meet specific criteria, including time on market and the presence of competition.
If a drug is selected for negotiation, its price will be reduced by 25%, then 35%, then 60% over a predefined timeline. HHS will try to lower those prices more through further negotiations with the respective drug manufacturers.
The collection of drugs subjected to this law will lose approximately $10 billion per year. A “double dipping” scenario may occur when these price reductions are combined with typical rebates to Part D Plan sponsors and 340B discounts. A 90% loss of revenue is plausible when this scenario occurs.
The impact of the IRA law on pharma will be measured in the billions of dollars. This loss of revenue will be focused not only on the drugs selected for negotiation by Medicare, but also in the commercial channel, as manufacturers are constrained in raising their list prices.
Part of the discussion focused on how to predict if your product may be subject to “negotiation”. If your product could conceivably become subject to HHS negotiations, you will want to be very familiar with different timelines and scenarios. This webinar can help you!
Send us an email to access a recording of this review of the Inflation Reduction Act and how it may impact pharm.
Understanding the world prescribers are living in allows for more meaningful customer interactions. MAP Training Programs build your knowledge on marketplace trends impacting providers and the pharmaceutical industry today.
Bring teams up-to-speed on the latest market access trends impacting their unique selling environment.
Subscribe to the Marketplace Blog to stay up-to-date on the latest trends impacting pharma
*required
Copay accumulator programs have only one purpose; increase profits for payers. Patients don’t gain an advantage, nor do manufacturers. On top of that, providers face the difficulty of helping patients
The 340B Program remains controversial. Hospitals and other Covered Entities (providers qualified to buy drugs at 340B prices) that benefit from the program describe it as a lifeline that keeps
[DISCLAIMER: This isn’t a legal analysis. We’ve simplified provisions in the law where we could while still describing the intent of the law] The Inflation Reduction Act (IRA) will have
The Pharma Perspective
Discussion Topics Include:
How the Inflation Reduction Act (IRA) will affect drug pricing
Pharma’s potential response
The impact on field teams
ProFusion delivers consulting and training in Managed Care & The Business of Medicine. Our customized solutions improve success for your field teams and sales.
© 2022 ProFusion, LLC. All rights reserved.
Subscribe to receive updates on the latest marketplace trends impacting pharma
*required fields
