Inflation Reduction Act: An Overview of Drug Price Negotiations and Predicted Lists of Potential Medicare Drugs
The Inflation Reduction Act (IRA) of 2022 established the Medicare Drug Price Negotiation Program as part of its aim to lower prescription drug prices. Through this program, the U.S. Department of Health and Human Services (HHS), via the Centers for Medicare and Medicaid Services (CMS), intends to establish a maximum fair price for certain high-expenditure, single-source Medicare drugs.
CMS has indicated it plans to publish the first 10 Medicare Part D drugs that will be eligible for negotiation under this program by September 1, 2023, with the negotiated prices for selected drugs published by September 1, 2024, and prices becoming effective starting January 1, 2026 (i.e. initial price applicability year 2026).
We note that timing may be impacted by potential litigation between manufacturers and the U.S. government. On June 7, 2023, Merck filed a lawsuit against CMS, HHS, and the Secretary of HHS challenging certain elements of the IRA. We expect additional manufacturers may file lawsuits in the months ahead.
In this report, we outline the drug selection process and provide IPD Analytics’ lists of potential selected drugs that we predict will be selected by Medicare for price negotiation based on the criteria outlined by CMS. We also include our rationale for excluding certain drugs from selection. The report includes drugs that may meet the criteria for initial price applicability in 2026, 2027, and 2028.