According to the June 2024 analysis by Milliman for the Pharmaceutical Research and Manufacturers of America (PhRMA), the Inflation Reduction Act’s (IRA) drug pricing provisions could increase out-of-pocket (OOP) costs for 3.5 million Medicare Part D patients in 2026. The analysis estimates that beneficiaries who take medicines subject to the Medicare Drug Price Negotiation Program (MDPNP) could see an average increase of 12% in annual OOP costs.
Let me explain using an example; Jardiance is being negotiated by Medicare and the negotiated prices will be in use as of January 2026. Currently about 6 in 10 patients pay a copay of < $50/month for Jardiance. The rest pay an average of about $169. My hunch is that is about the 25% standard coinsurance with a price of $676. The folks with the copay are paying less than the 25% standard benefit design because they are in supplemental plans and their insurance is covering more.
In 2025, beneficiaries with coinsurance would pay 25% of the plan’s negotiated price ($169) and that is the amount that would count towards their annual OOP maximum of $2,000.
If a beneficiary is paying copay, they pay $40 but the plan’s supplemental coverage ($169 – $40) of $129 would count toward the beneficiaries annual OOP maximum even though they didn’t pay it directly.
| Jardiance | ||
| $676 (non-Medicare-negotiated price) | ||
| Actual OOP | Amount toward OOP max | |
| Patient with Coinsurance | 25% x $676 = $169 | $169 |
| Patient with Copay | $40 | $169 |
Now Medicare is negotiating Jardiance and, while we don’t know where it will land in terms of price, for this example, let’s say $300.
In 2026, the beneficiary with coinsurance will pay $75 (25% of $300) which is less than they would pay without Medicare negotiation. And that $75 will count towards their OOP max. They will save $94. It will take them longer to reach that maximum (if they reach it at all.)
The beneficiary with a copay will still pay $40 but the plan’s supplemental coverage is decreased. Only $75 will count towards the OOP max for the year. It will take beneficiaries more OOP to reach the OOP cap than it would have with a higher drug price and more supplemental coverage.
| Jardiance | ||
| $300 (Medicare negotiated) | ||
| Actual OOP | Amount toward OOP max | |
| Patient with Coinsurance | 25% x $300 = $75 | $75 |
| Patient with Copay | $40 | $75 |
Long story short? With Medicare negotiation, the value of plan supplemental coverage decreases and beneficiaries may pay more OOP.
But … there are assumptions here. We don’t know what plans with copays will do. Maybe they will decrease the copay. Or maybe they will move away from copays and the situation will be worse with almost all beneficiaries paying $75 OOP.