10 Ways the Inflation Reduction Act will Impact Cancer Care

This week, President Biden signed into law the Inflation Reduction Act (IRA). While the name of this bill doesn’t sound like it has a thing to do with healthcare, there are major provisions in the bill that will greatly change the landscape of healthcare, especially in regards to prescription drug coverage for people with Medicare.

So, what is in the law and when will things go into effect?

  1. The most immediate change is the extension of subsidies to help individuals purchase health insurance through the Healthcare marketplace under the Affordable Care Act. These subsidies were set to expire at the end of this year, but they have now been extended through 2025.
  2. Beginning in 2025, there will be a cap of $2000 on out-of-pocket prescription drug costs for individuals with Medicare part D drug coverage. This means that the MOST money that individuals with part D coverage would pay is $2000 a year for the prescriptions. And yes, your part D deductible counts towards this out-of-pocket max! This is a huge change for people with cancer who take oral cancer medications.
  3. The law also allows those with part D to spread out the costs of their medications over the year. So that $2000 cap won’t all be due in January! This will help individuals plan and budget within their incomes, especially seniors on fixed incomes.
  4. Beginning in 2024, the 5% coinsurance for part D catastrophic coverage will be eliminated. The cap for out-of-pocket spending in 2024 will be around $3250.
  5. Annual increases in part D premiums are limited to no more than 6% for 2024-2030. This means you won’t be paying much more on the front end for your prescription drug coverage.
  6. People with Medicare will not pay more than $35 a month for insulin. This begins in 2023.
  7. The eligibility for low-income subsidies for Medicare part D is expanding. This begins in 2024.
  8. All vaccines (shingles, pneumonia, COVID) will be covered with NO CHARGE for individuals with Medicare. This begins in 2023.
  9. The federal government will now negotiate prices for some medications covered under part D. This will not begin until 2026 and will be limited to 10 drugs in the year. We do not know which drugs will be included in negotiations at this time. This part of the bill is very complicated and we will learn more about how it will work as we get closer to when it goes into effect.
  10. Drug companies are required to pay a rebate to Medicare if prices rise faster than inflation for drugs covered under Part D. This means that if the price of a drug increases more than the inflation-adjusted price the drug company would need to pay the difference back to Medicare. If they do not pay the rebate, they are subject to a substantial penalty. This holds the manufacturers accountable for setting the prices of their medications in line with inflation. This begins in 2023.

The IRA marks a huge change for healthcare delivery and insurance coverage, in particular for those with Medicare Part D. We are still learning more about the implementation of these new programs and rules. Stay tuned to OncoLink for ongoing information about health insurance, the IRA, and program changes!

Christina is a board-certified, clinical oncology social worker and the psychosocial content editor at OncoLink. She is an expert in health insurance navigation and is dedicated to helping individuals understand how insurance works for them.

2 thoughts on “10 Ways the Inflation Reduction Act will Impact Cancer Care

  1. Will health plans/insurers that offer Part D be forced to include a reasonable array of cancer drugs, including immunotherapies, and carT therapies in their formularies? I sure hope so but doubt that will happen.

    1. Remember that most carT and many immunotherapies are Part B covered (ie delivered via IV in MD office or hospital). But I think that, CMS who administers Medicare plans, will likely not include these cancer drugs in their drugs that prices will be negotiated on–at least for the foreseeable future–because of the lower number of individuals who use these drugs; compared to medications for hypertension, diabetes, COPD, and heart disease.

      An important takeaway though is that regardless of what drug—your costs for Part D covered medications will be no more than $2000 per year beginning in 2025. EVEN high dollar cancer medications where patients are paying >$10000 per year.

      In regards to formularies, these can change from year to year. So it is important to check you part D plan. But in many cases, drugs that are considered “standard of care” are on formulary. However there may be step therapy you have to go through before this can be approved and/or reimbursement tiers in regards to the prices of the medications. I do not believe this is going away.

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