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As policymakers continue debating how to lower drug costs for Americans, one thing is becoming increasingly clear: government price setting is the wrong approach. Three years into the Inflation Reduction Act (IRA), seniors are facing higher costs, fewer choices and more barriers to care.
Why? Because insurers and PBMs control how much patients pay out of pocket, which medicines they can get and what hoops they have to jump through. And in response to the IRA, these middlemen are adjusting their policies, shifting patients from copays to coinsurance, pushing drugs to higher tiers on formularies and increasing coverage denials. But instead of reining in abusive practices from insurers and PBMs, the IRA has made it harder for seniors to access their medicines.
Here’s how the IRA is reshaping affordability and access:
- Higher costs despite price setting. As plans adjust to the IRA changes, patients are facing higher costs and fewer options––despite the IRA’s price-setting provisions. Premiums for non-low-income beneficiaries in standalone Part D plans are set to jump 32% next year. The number of available standalone Part D plans has also decreased by more than half since 2023, limiting choices for seniors and people with certain disabilities.
- Access to medicines is getting worse. More than 70% of patients with newly diagnosed chronic conditions face immediate coverage denials as PBMs and insurers increasingly block prescribed treatments and impose unnecessary barriers. At the same time, 86% of independent pharmacies are either considering not stocking or will not stock at least one price-set drug due to cashflow concerns.
- Future treatments are at risk. Instead of lowering out-of-pocket costs, price setting siphons billions of dollars away that could otherwise be used to research and develop new, innovative medicines. That means fewer treatments to fight against our nation’s toughest health care challenges like cancer, mental health and other chronic conditions. All while China is seeking to overtake the U.S. as the global leader in drug development––much like how they surpassed Europe just a few years ago.
There’s a better way: If policymakers are serious about lowering drug costs for seniors, then the evidence paints a clear picture that price setting is not the solution. Instead, they should address flaws in our health care system that allow 50 cents of every dollar spent on medicines to go to entities that play no role in their development.
Learn more about solutions at PhRMA.org/PriceSetting.
Matthew Norawong
Matthew is a senior manager on PhRMA’s Public Affairs team focusing on Medicare, Medicaid, importation and more. Prior to coming to PhRMA, he previously worked as a health policy analyst for National Journal’s Network Science Initiative, primarily supporting companies in the life sciences industry. Matthew completed his undergraduate studies in political science at the University of Washington and subsequently earned a Master of Public Health from the George Washington University. A native of the Pacific Northwest, Matthew currently resides in Washington, DC. Outside of the office, Matthew is an avid runner and enjoys playing bass guitar with his indie rock band.
Matthew Norawong
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