This afternoon I’m giving a talk to a group of patient advocates on the Medicare prescription drug benefit (Part D). As I prepared, I was struck by the fact that this is one of the few times that I feel that I’m (mostly) giving out good policy news. Are there downsides to the Medicare Part D changes that came about because of the Inflation Reduction Act (IRA), well yes, but from a patient perspective, it’s mostly good.

Starting this year, patients have an out-of-pocket cap. It is high if they are only on generics ($8k) but realistically, most patients are on a mix of brand and generic and could have cost-sharing closer to $3.3k. Now realistically, less than 2 million beneficiaries have this kind of spending, but it is a big change for them. Especially since they usually have high medical costs that go with those prescription drug costs. Plus it is the idea that it COULD happen that worries so many beneficiaries. We all hear stories about friends and neighbors that have a bad year and face high costs. This is a backstop.

Then next year we have a true out-of-pocket cap at $2k along with the ability to spread those costs over the course of the year. Now this will be confusing because each month’s costs will be different BUT let’s take a moment. This is HUGE. We can work on all of the communications needed (and we will NEED to) but this is a YAY.

Now realistically, there are things I’m watching that can come out of all of this – including plan choice, premiums and formulary restrictions. While beneficiaries will be paying less, manufacturers and plans will be picking up the additional liability. And actions have reactions.

Plans will try to manage costs in order to keep premiums in check so expect additional utilization management (especially prior authorization and step therapy) and formulary restrictions where they can. We’ll see a strong push to Medicare Advantage and away from the standalone prescription drug plans (PDPs) because Medicare Advantage plans are able to use rebate dollars to manage the premiums and keep them low (or non-existent.) Which has some long-term effects to keep an eye on.

Manufacturers with products not under negotiation (starting in 2026) will be providing rebates of up to 20% and the benefit redesign, along with the additional liability, will likely cause manufacturers to pull back from some patient assistance funding.

Overall the positives are a lot to celebrate but the negatives are the ones that health policy nerds need to watch and continue to nudge the program to be the best for beneficiaries.