Inflation Reduction Act Drug Pricing
The Inflation Reduction Act (2022) allows Medicare to negotiate drug prices for the first time. CMS selected the first 10 drugs for negotiation in 2023, with negotiated prices taking effect in 2026. The negotiated prices are expected to be 25–60% below current list prices. Commercial plans may benefit from lower prices over time — but the direct impact on commercial plans is uncertain.
PBM Transparency Legislation
PBM transparency legislation is advancing at the federal and state levels. Key legislative proposals: (1) require PBMs to pass 100% of rebates to plan sponsors; (2) prohibit spread pricing; (3) require disclosure of all PBM revenue sources; and (4) require PBMs to accept fiduciary status. These proposals, if enacted, would fundamentally reshape the PBM business model.
The Reform Opportunity
IQ Insight
Drug pricing reform creates both opportunities and risks for employer plans. The opportunity: lower drug prices and greater PBM transparency. The risk: manufacturers may respond to lower prices by reducing rebates — which could increase net costs for commercial plans. Monitor legislative developments and model the potential impact on your plan.