Inflation Reduction Act Estimated to Yield Billions in Drug Savings

In HealthDay News
by Healthday

Ceiling prices for negotiation would have reduced Medicare prescription drug spending by ~5 percent if implemented from 2018 to 2020

By Lori Solomon HealthDay Reporter

THURSDAY, Feb. 2, 2023 (HealthDay News) — A new simulation suggests Medicare drug savings from the Inflation Reduction Act of 2022 will be substantial, according to a study published online Jan. 27 in JAMA Health Forum.

Benjamin N. Rome, M.D., from Brigham and Women’s Hospital in Boston, and colleagues simulated drug selection and the minimum savings that would have been achieved at statutory ceiling prices if Medicare drug price negotiation had been implemented from 2018 to 2020.

The researchers found that among the 40 selected high-spending drugs, 35 were primarily reimbursed through Medicare Part D and five through Part B. Ten were biologics. Endocrine (11), neurologic or psychiatric (five), pulmonary (four), rheumatologic or immunologic (four), and cardiovascular drugs (four) were the most common therapeutic classes. Twelve years was the median time from U.S. Food and Drug Administration approval to selection. In the two years between selection and price negotiation, three drugs faced generic competition. Excluding these three drugs, estimated net Medicare spending from 2018 to 2020 was $55.3 billion and spending at ceiling prices would have cut an estimated $26.5 billion of spending, representing 5 percent of estimated net Medicare drug spending during those three years.

“The findings suggest that despite restrictive selection criteria for negotiation, the Inflation Reduction Act of 2022 will likely result in substantial savings in the first three years for many high-spending drugs,” the authors write.

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