The Inflation Reduction Act and Oncology Drug Pricing: What Pharmacists Need to Know

The Inflation Reduction Act (IRA) has been law since 2022, but its most consequential provisions for oncology are only beginning to arrive. With the first negotiated drug prices now in effect, Part B drug negotiations on the horizon for 2028, and growing evidence of upstream effects on drug development investment, the IRA is no longer a future policy concern—it is an active one.

What Are The 3 IRA Provisions That Directly Affect Oncology Pharmaceuticals?

Three main IRA provisions affect oncology pharmaceuticals.^1,2 The first allows the federal government to negotiate maximum fair prices (MFPs) directly with manufacturers for high-spend Medicare drugs. The second penalizes manufacturers for raising list prices faster than the rate of inflation. The third limits patient out-of-pocket costs for drugs covered under Medicare Part D. Each provision operates on a different timeline and affects different segments of oncology practice—from oral agents dispensed at specialty pharmacies to infused biologics administered in clinic.

What Has Happened So Far With Drug Price Negotiations, And Which Oncology Drugs Are Affected?

The negotiation program scales on a defined statutory schedule: 10 drugs for 2026, 15 for 2027, 15 for 2028, and 20 each year thereafter, with the first two years limited to Part D drugs only.¹ In oncology, ibrutinib (Imbruvica) was the cancer drug selected in the first round, with a 38% price cut taking effect in 2026.³ The second round, effective 2027, includes enzalutamide (Xtandi; Pfizer) and palbociclib (Ibrance; Pfizer).² Pharmacists managing formulary decisions, prior authorizations, and patient counseling around these agents should anticipate that negotiated pricing will affect cost-sharing structures and, in some cases, formulary positioning as plans adjust to reflect lower net costs.

Why Is 2028 a Critical Inflection Point For Medicare Part B?

This is the provision with the most direct impact on oncology pharmacists in infusion and clinic settings. The IRA extends price negotiation to Medicare Part B drugs—physician-administered drugs including infused oncology biologics—starting in 2028.^1,4 Under current law, Medicare reimburses Part B drugs at ASP plus 6%, where the 6% add-on covers procurement, storage, staffing, and administration costs. Under the IRA, reimbursement will shift to MFP plus 6% for negotiated drugs—meaning if the negotiated price falls below the current ASP, the add-on payment shrinks proportionally even though the work of administering the drug does not change.³

The financial stakes are significant. An Avalere Health analysis commissioned by the Community Oncology Alliance projects that oncology and hematology providers could face a 39% to 64% decrease in Medicare fee-for-service add-on payments and a 13% to 21% reduction in commercial and Medicare Advantage add-on payments—totaling $12 to $19 billion in losses from 2028 to 2032.⁵ Pembrolizumab (Keytruda; Merck) and nivolumab (Opdivo; Bristol Myers Squibb) are widely anticipated to be among the Part B drugs selected for negotiation, representing two of the most widely administered agents in oncology practice.³ Independent infusion centers and rural oncology practices with limited cash flow flexibility are expected to feel the impact most acutely.⁵

How Will MFP Spill into Commercial and Medicaid Reimbursement?

Because Medicare ASP is tied to commercial market reimbursements, the spillover impact will compound the financial burden on providers beyond Medicare alone.⁵ The effectuation of MFPs for physician-administered drugs creates a cascade of downstream effects: eroding add-on payments for providers, compressing ASP-based commercial reimbursements, and potentially duplicating manufacturer concessions through Medicaid Drug Rebate Program interactions.⁴ For oncology pharmacists reviewing practice finances, the Part B MFP is not a Medicare-only story—it is a market-wide repricing signal.

How Is the IRA Changing Manufacturer Investment Behavior?

This is where the KOL community is raising some of the most consequential long-term concerns. As the expectation of future revenue is reduced by the negotiation program, investment in post-approval clinical development is declining—particularly for new disease indications, small patient populations, pediatric populations, and new combination therapies.⁶

Anecdotally, some companies are re-examining plans for post-approval trials in additional indications: if a cancer drug has a short window before IRA price setting, running long trials in other tumor types becomes difficult to justify economically.² Companies may also delay launching agents for smaller patient populations if doing so would trigger earlier negotiation timelines that affect revenue from larger indications.²

The "pill penalty"—a structural disparity in which small molecule drugs face the negotiation clock after 9 years of approval while biologics receive 13 years—is an additional distortion with direct oncology implications.⁷ Small molecule drugs, which include many targeted oral oncology agents, have faced disproportionate investment declines since the IRA's passage. Executive Order 14273, issued in April 2025, directed HHS to explore aligning the two timelines, but legislative action has not yet followed.⁷

Is Oncology-Related Toxicity Management Affected?

Yes, and this is an underappreciated dimension. Several drugs on current and anticipated negotiation lists are not primary oncology agents but are critical to managing immune-related adverse events in patients on checkpoint inhibitors. Immunologic agents used to manage immune checkpoint inhibitor toxicities—including agents that span rheumatology and gastroenterology indications—have appeared on negotiation lists, and their selection could affect formulary access and cost-sharing for oncology patients who depend on them for treatment continuation.⁵

Pharmacists managing complex immunotherapy patients should monitor whether supportive care agents are selected in future negotiation rounds, as access or formulary changes for these drugs could indirectly affect immunotherapy continuation decisions.

What Does the IRA Mean For Out-Of-Pocket Costs?

Here the news is genuinely positive. The IRA eliminated uncapped 20% co-insurance that previously applied to high-cost Part B drugs. For a $200,000 annual cancer drug, this saves a patient $40,000 per year.⁴ The Part D out-of-pocket cap, set at $2,000 in 2025 and $2,100 in 2026, represents the most impactful patient-facing change for oral oncology agents, eliminating the catastrophic coverage gap that caused many patients to delay or discontinue oral chemotherapy at high-cost points in the benefit year.⁸

Pharmacists should incorporate this cap into oral oncolytic initiation counseling—patients who previously rationed doses in anticipation of catastrophic-phase cost-sharing may no longer need to, and this behavioral shift may improve adherence in ways that existing data have not yet captured.

REFERENCES

1. Congressional Research Service. Medicare drug price negotiation under the Inflation Reduction Act: industry responses and potential effects. Congress.gov. Accessed August 5, 2026. https://www.congress.gov/crs-product/R47872

2. Doherty K. Inflation Reduction Act leads to seesaw effect between oncologic drug savings and development. OncLive. Published May 21, 2026. Accessed August 5, 2026. https://www.onclive.com/view/inflation-reduction-act-leads-to-seesaw-effect-between-oncologic-drug-savings-and-development

3. Oncology News Central. Oncologists and cancer care may suffer under new Medicare drug pay cuts. Published December 17, 2025. Accessed August 5, 2026. https://www.oncologynewscentral.com/oncology/oncologists-and-cancer-care-may-suffer-under-new-medicare-drug-pay-cuts

4. DrugPatentWatch. The IRA price reset: what it actually does to pharma pricing, and what comes next. Published March 11, 2026. Accessed August 5, 2026. https://www.drugpatentwatch.com/blog/the-ira-price-reset-what-it-actually-does-to-pharma-pricing-and-what-comes-next/

5. Caffrey M. Part B losses to oncologists due to IRA could total $12B through 2032 across Medicare, commercial plans. *Am J Manag Care*. Published September 17, 2024. Accessed August 5, 2026. https://www.ajmc.com/view/part-b-losses-to-oncologists-due-to-ira-could-total-12b-through-2032-across-medicare-commercial-plans

6. Health Affairs Forefront. The IRA and post-approval clinical research for cancer medicines. Accessed August 5, 2026. https://www.healthaffairs.org/content/forefront/ira-and-post-approval-clinical-research-cancer-medicines

7. Pienomial. Drug pricing intelligence in the IRA era for market access. Published June 8, 2026. Accessed August 5, 2026. https://www.pienomial.com/blog/drug-pricing-intelligence-ira-market-access

8. Medicare Resources. How the Inflation Reduction Act has improved Medicare prescription drug coverage. Updated December 16, 2025. Accessed August 5, 2026. https://www.medicareresources.org/blog/how-the-inflation-reduction-act-has-improved-medicare-part-d-prescription-drug-coverage/