Asembia’s AXS23 Summit drew thousands of the nation’s leading healthcare and pharmaceutical industry decision-makers, and Avalere was at the center of it all, with 12 experts in attendance, exchanging ideas with current and prospective business leaders.

The agenda was packed with three days of sessions with insights from government and private sector leaders, including several sessions from Avalere experts in drug pricing, plan economics, and patient assistance. The most frequent topic of conversation for the entirety of the conference was the landmark policy changes to the healthcare industry due to the Inflation Reduction Act (IRA). The legislation is packed with changes the industry must contend with, from provisions that impact pricing, plan economics, and physician reimbursement to what patients are expected to pay for their medications. Below, is a recap of Avalere’s presentations on IRA drug pricing policies and the law’s impact on the need for patient assistance.

Key Considerations for Preparing for the IRA’s Drug Pricing Policies

“The Inflation Reduction Act probably represents the biggest change to how Medicare pays for drugs since the creation of Part D way back in 2003,” shared Matt Kazan, Managing Director, as he kicked off the session with Omar Hafez, Managing Director, and Kelsey Lang, Principal. Download the slide presentation.

While many components of the IRA are prescriptive and clearly defined, many require clarification and guidance from the Department of Health and Human Services (HHS).

Among them is the list of drugs subject to the IRA’s provisions, which will be released in September 2023. While the industry awaits instructions, speculation grows over how the provisions will shape the pricing, access, and reimbursement landscape—as well as research and development (R&D) and innovation investment. However, several key themes are clear to our Avalere thought leaders in the short term:

1. Drug pricing negotiation shortens the lifecycle of branded products and creates a condensed timeframe for pharma to recoup investment as brands prepare for eventual price reductions, creating spillover effects in the Medicaid and commercial markets.
2. Negotiation enhances the importance of a robust clinical evidence strategy as the primary lever to demonstrate product value.
3. The restructuring of the Part D benefit includes a $2,000 out-of-pocket (OOP) spending cap and a new manufacturer discount program across coverage phases, which will mean a shift in financial liability from beneficiaries to plans.
4. Inflation rebates in Part B and Part D discourage price increases and have implications for manufacturer pricing strategies going forward.
5. The Centers for Medicare and Medicaid Services’ negotiation of drug pricing shifts therapeutic market perspectives for all manufacturers and other stakeholders.
6. Implementation of the law creates new tradeoffs for drug development, and manufacturers should assess R&D and business development strategy in light of the policy changes.

After the IRA: The Continued Need for Charitable Patient Assistance

In this session, presenters discussed how the IRA’s Medicare Part D benefit reforms would impact access to treatment and the need for financial assistance for patients with complex conditions. The panel included Avalere Practice Director Kelly Brantley with Carmine DeNardo, Vice President and General Manager, Omnicell Specialty Pharmacy Services, and Kevin Hagan, President and CEO, PAN Foundation. Download the slide presentation.

Patients will see affordability relief from the IRA’s cap on Part D drug costs, but relief is still a few years away. Beginning in 2024, the IRA establishes a beneficiary OOP cap at the catastrophic threshold, estimated to be about $3,233 in OOP costs (not including manufacturer coverage gap discounts). In 2025, Part D beneficiaries will have a cap of $2,000 per year on OOP expenses for prescription medications and monthly limits on OOP costs by setting up installments (i.e., “OOP smoothing”), which will especially benefit patients who face higher expenses at the beginning of the year after deductibles reset.

Even with these reforms, some beneficiaries may still face affordability challenges resulting from the timing of their prescription fills and income. An Avalere analysis found that about 800,000 beneficiaries in 2024 and 200,000 in 2025 will have OOP costs that exceed 10% of their annual income. And patient populations most likely to need continued financial assistance from charitable foundations are Black and Hispanic adults and adults with annual incomes less than $50,000. “Understanding the unique needs and circumstances of patients is crucial to providing the most effective support and assistance,” said Kelly Brantley.

Industry Call to Action: Balancing Innovation with Cost While Protecting Patient Access

Data and evidence are taking a front-row seat for life sciences organizations coming out of Asembia in anticipation of a fully implemented IRA world. This law creates a tremendous opportunity for manufacturers to be proactive in planning and executing their evidence package. Pre-commercialization planning with the lenses of value and evidence will be a key differentiator mitigating risk while plotting the path to maximizing value. It also will be key to designing highly configurable patient and medication access assistance based on specific therapeutic areas and disease-specific patient journeys and to understanding plan economics in shaping a comprehensive access strategy.

Avalere’s experts in organizational design, drug pricing, reimbursement, plan design, patient support, and field team effectiveness can help you understand what IRA provisions mean for your organization and industry. To better prepare for the changing healthcare landscape in 2023 and beyond, connect with us.

Don’t forget to join us on May 17, 2023, from 1:30–2:30 PM ET for Demystifying IRA Drug Price Negotiation (registration required).