The Inflation Reduction Act (IRA) will result in impacts to Medicare Part D formulary design. A session at the AMCP 2025 Annual Meeting explored the changing incentives in formulary structure and drug utilization as IRA implementation proceeds.
Provisions of the IRA include efforts to amend the drug price negotiation process. Starting in 2026, 10 drugs selected from a list of those with the highest gross Medicare spend will be eligible for maximum fair price (MFP) negotiation. Prices will be adjusted based on manufacturer-specific data and evidence on alternative treatment options. Medicare Part D plans are required to cover all dosages and formulations of drugs with MFPs in effect.
MFP drugs are not subject to applicable manufacturer discounts under the IRA’s Medicare Part D Manufacturer Discount Program. This redesign will increase manufacturer liability from 0% to 10%. The coverage gap will be eliminated, and patient out-of-pocket costs will be limited to $2,000 annually.
Among the selected MFP drugs, the average coverage was 82.0% in 2019 and increased to 91.3% by 2023. Access without prior authorization was common for cardiovascular and diabetes medications (2019: 71.2%-100%; 2023: 99.8%-100%), and access without step therapy was also high for all 10 selected medications (2019: 92.1%-100%; 2023: 94.6%-100%).
The presenters noted that selected drugs had broader coverage and less restrictive utilization management than therapeutic alternatives in 2024. They also noted that the Medicare Part D redesign may accelerate increasing formulary restrictiveness of drugs in competitive classes.
They then discussed how the IRA implications may change incentives for formulary coverage. The MFP may reduce flexibility for rebates in Medicare, whereas therapeutic alternatives may retain flexibility in this area. Increasing plan liability may result in increased formulary restrictiveness. There may also be an incentive to place selected MFP drugs on less favorable tiers or to apply utilization management, while also incentivizing increased nonmedical switching to nonselected therapeutic alternatives.
Reference Einodshofer M, Patterson J, Sarraille W. Inflation Reduction Act ripple effects: considerations for patient access and 340B. Presented at: AMCP 2025; March 31-April 3, 2025; Houston, TX. Session L2.
