The Inflation Reduction Act – or IRA – contains $500 billion in new funding and tax breaks intended to boost clean energy, strengthen taxpayer compliance, and reduce healthcare costs. It includes three provisions concerning Medicare prescription drug prices that have the potential to dramatically impact the pharmaceutical industry, and patient support in particular.

For a sense of the significance of this legislation, consider that Medicare spending accounted for 21% of total national health expenditure in the US in 2022 (the last year data is available). To put that in perspective, commercial health insurance spending is only 8% more. 

While it’s unclear exactly how each part of the ecosystem will react, the financial components included in the IRA will very likely impact patient support. Thus, it is paramount for patient support leaders to understand these changes and how best to navigate them as they go into effect. 

As with other challenges, AI is well positioned to help here. Here’s what you need to know.

3 ways the IRA impacts pharmaceutical patient support

Medicare drug price negotiation

For the first time ever, Medicare can negotiate drug prices directly with manufacturers for certain high-cost drugs. The initial list includes 10 drugs, will go into effect in 2026, and will expand in subsequent years to a total of 60 drugs by 2030. For pharmaceutical manufacturers, this could cause pressure on the prices they can charge for some of their most profitable drugs. 

Lower drug prices should increase the number of patients who have access to them, which we can all agree is a good thing. However, this reduction in revenue per patient could lead pharmaceutical companies to decrease the funds allocated to patient support programs. It’s also worth noting that Medicare currently receives a standard 24% discount on drug prices; should that discount increase, commercial insurers may look to lower the prices they’re paying, as well. 

While the full impact won’t be understood for some time, Cencora’s Scott Shields points out that other countries, including Canada, Germany, and France, have implemented such negotiation processes. And while the IRA’s programs are much more modest than these other countries’ – and healthcare in the US operates very differently – we may look to these examples for possibilities of the direction of the US system. As Shields writes, “the US system is [now] far more likely to resemble Europe and Canada in the future than in its pre-IRA days.”

Medicare Part D redesign

Beginning in 2024 and completely phased in by 2025, out-of-pocket costs for Medicare Part D enrollees are capped at $2,000 per year and $35/month for insulin. Along with those changes, the coverage gap (or “donut hole”) phase will also be eliminated. As an example of what that looks like, a Part D enrollee who takes only brand-name drugs costly enough for them to reach the catastrophic threshold would pay approximately $3,300 this year but only $2,000 in 2025.

These changes will ideally increase access to medications, as they lower the cost barrier for patients, potentially leading to higher medication adherence and consumption. But as is the case with the impact of drug price negotiation, the financial pressures ensuing from out-of-pocket caps will force pharmaceutical manufacturers to find efficiencies and cost savings throughout the lifecycle of a drug. 

Inflation price increase caps

The IRA will also require drug manufacturers to pay rebates to Medicare if the prices of their drugs rise faster than the rate of inflation. Along with the Part D redesign provision outlined above, this one may have the most immediate impact, on both the federal budget and manufacturer’s bottom lines, per Oliver Wyman

A rather straightforward element of the legislation, the goal is to reduce both the frequency and magnitude of price increases for drugs covered by Medicare. Before the IRA, there were no limits on either. Manufacturers will likely need to reevaluate launch price strategy as a result. 

Recommendations for patient support leaders 

Because of the IRA, pharmaceutical patient support is at an inflection point: While the number of patients may increase due to lower drug costs, the budget for supporting these patients will be tighter. Companies will need to seek efficient, cost-effective means of providing patient support, potentially leveraging AI to maintain or enhance the quality of support within constrained budgets.

We recommend patient support leaders examine the way their programs operate to understand areas that might be prime candidates for automation. As an example, an increased number of patients may mean more need for adherence support. In a post-IRA era, hiring additional nursing staff or clinicians may not be in the budget, but there are technologies that can automate some of this work. Or, as Infinitus does, it is possible to automate the benefit verification and prior authorization follow-up processes, which can save on the costs of these necessary yet complex exchanges of data. 

Of course, not all AI solutions or AI vendors are created equal, and it can be hard to keep up with the speed at which the technology advances. To help you evaluate potential AI solutions, we’ve created a brief guide for patient support leaders.