Expert Discusses the Impact of Medicare Drug Pricing Reforms on the Pharmaceutical Industry

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Access to certain drugs may be limited through tighter formulary controls and utilization management by Medicare Part D plans dealing with higher costs

Corey Ford, vice president of reimbursement and policy insights at Cencora, discusses the impact of recent drug pricing legislation on the pharmaceutical industry and Medicare beneficiaries. He mentions that drugs could be limited due to formulary control, support programs for patients should be redesigned, and innovation could be potentially negatively impacted.

Pharmacy Drugstore Checkout Cashier Counter | Image Credit: Gorodenkoff - stock.adobe.com

Image Credit: Gorodenkoff - stock.adobe.com

Q: What are some of the biggest takeaways from the first round of drug price negotiation under the Inflation Reduction Act?

Corey Ford: I wish we really could say that we had a lot of information and intelligence about what's happening, but we haven't. And it's kind of in tight lipped, and that was kind of the process, how it started off from the beginning, but we have heard some rumblings here or there from some of the manufacturers about this. But we're really not going to know just how it's going, how things are playing out whether it seems like they're really taking a look to cut heavily or not, until we get the MFPs in September.
Q: How can the drug negotiations impact overall access and affordability of drugs for patients? What are some drugs that are likely to be included in the second round?

Corey Ford: There's really a lot of potential applications here in terms of access and affordability. One thing that comes to mind are for 2026 and 2027, when they're just Part D drugs, is that drugs that are negotiated, they have to be covered on formularies, but that doesn't necessarily mean that they're going to have open access or could be heavy utilization management, even higher costs before patient hits the out of pocket cap. So there's the things that we're going to have to navigate from that perspective. In addition, when we get to 2028, and we introduce Part B drugs, there's a real significant impact to providers now on the commercial side, potentially being underwater from a Part B perspective, which is something that is going to be a significant impact for that as well.
Q: What are some of the challenges the Inflation Reduction Act poses for biopharmaceutical companies?

Corey Ford: There are a number of challenges that biopharma companies are having to face. Obviously, as we've been talking, the one that comes to mind the most are the pricing pressures that they face, not just the Medicare drug price negotiation program, with the inflationary cats that are seeking to tamp down drug price increases on an annual basis and Medicare. But then manufacturers also under the Par D redesign now had to pay 10% or 20% of the cost of a drug in the initial coverage phase for catastrophic phase, respectively. So across all of these manufacturers, biopharma companies are really having to pay more, and then I think, when we think about the Part D benefit redesign, there is going to be some of these other unintended consequences related to access and affordability and Part D because cause Part D plans now have a significantly higher liability, and they're going to look to narrow formulary coverage and drive more utilization management for those drugs, even if patients are experiencing better affordability because of the out of pocket cap.
Q: What are some of the long-term implications of the IRA on the biopharmaceutical industry and the health care industry in general?

Corey Ford: Certainly from a biopharma standpoint, there's the potential significant impact on innovation. As this is a financial hit to industry, they may be more limited in where they're doing their preclinical work, how they're thinking, exploring BD opportunities. So there will be an impact on innovation and in terms of the broader health care spectrum. Do we see BioPharm companies move to other patient populations outside of Medicare because of these government pricing pressures? So that could be one of those other spillover effects that we see in the broader health care space.
Q: Is there anything else you would like to add?

Corey Ford: Certainly, the Medicare drug price negotiation program has gotten most of the attention of industry, and it should, but I also think that the Part D but if it redesign is going to have a very bad impact for products within Part D. It's going to be much more competitive now in an already competitive market, and so really biopharma companies are going to have to explore new contracting strategies, and I think there's also a play here in terms of patient support, to really rethink how can we best support the needy so patients now that some of their affordability challenges are being erased.

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