Medicare enacted 10 negotiated drug prices for some of the nation’s costliest prescription medications Jan. 1. However, years before the new prices launched, pharmaceutical companies widely altered their pricing strategies, according to a Dec. 18 Vizient report.
The Inflation Reduction Act, which President Joe Biden signed into law in August 2022, heralded significant changes to drug pricing in Medicare Parts B and D, as it ended a 19-year-old ban on Medicare from negotiating with drugmakers on prescription prices.
Leading up to Medicare implementing the first cycle of negotiated drug prices in 2026, drugmakers pursued a variety of pricing strategies, according to Vizient’s report.
Some manufacturers accelerated price hikes up to 13.3% annually, while others slowed the rate of price increases, decreased drug prices or kept the same rate of price increase.
The Medicare Drug Price Negotiation Program authorized CMS to negotiate a “maximum fair price” for 10 high-cost drugs in Medicare Part D, which covers prescription medications, with the new prices debuting in 2026. The program will expand to 15 Medicare Part D drugs in 2027, and the 2028 negotiation cycle can include physician-administered Part B medications. Up to 20 drugs can be chosen for 2029 and subsequent years.
To examine how drug manufacturers changed their pricing strategies pre- and post-Inflation Reduction Act, Vizient analyzed the wholesale acquisition cost for the top 100 high-expenditure Medicare Part B and Part D drugs.
After the IRA became law, drugmakers accelerated prices for a majority — 90% — of 62 Medicare Part B products. Five percent of those medications retained the same rate of price increases, 5% saw a slower rate and zero prices decreased.
For Medicare Part D — which is affected years before Part B — 71% of 85 products saw a faster rate of price increase. In comparison, 19% recorded a slower rate of price increases, 5% saw the same rate of price increases and 5% had lower prices.
“Overall, these patterns suggest a transitional market environment in which manufacturers are recalibrating pricing strategies in response to early IRA signals rather than uniformly slowing price growth,” the report said.
“The initial impact of the IRA appears to involve greater segmentation and a compression of pricing behavior — some products accelerating, others leveling off and a few taking proactive price reductions in advance of formal negotiations,” according to the report’s conclusion. “Continued monitoring will be essential to differentiate emerging policy effects from normal market dynamics as subsequent phases of IRA implementation take hold.”
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