Dr Dennis Scanlon: IRA Drug Price Negotiation Provision a Step in the Right Direction

It's too early to see the full influence of the new Inflation Reduction Act (IRA) provision allowing Medicare to negotiate drug prices with companies, but Dennis Scanlon, PhD, professor of health policy and administration, Pennsylvania State University, thinks that it will “have some positive implications” for beneficiaries.

Transcript

How do you think the IRA provision allowing Medicare to negotiate drug prices with companies will affect drug prices as a whole, and how long will it be before patients start to see its effects?

Just to put this in a little bit of context, for many years, decades, Americans have been concerned about increasing pharmaceutical pricing, and the amount both that they pay out of pocket, but also their coverage, whether it's insurance, either on the commercial side or through the federal government or state government. That's the context for these changes, which were part of the Inflation Reduction Act.

I think that there seems to be broad support, on the one hand, for making pharmaceutical access and pricing easier for Americans. On the flip side, of course, are the arguments that we need to have from the pharma companies, that we need to have reimbursement that obviously will provide for research and development, and the ability to address future needs and ongoing needs of populations. I guess what I would say in answer to the question, probably the most specific thing that this does is it allows for the federal government to negotiate for a subset of drugs directly with the pharma industry manufacturers, and presumably distributors as well, which is something that had been not allowed as part of the Medicare program.

A specific clause that prevented that has been lifted, but not unilaterally; just for, as I understand it, a subset of drugs, some of the most expensive ones with particular conditions. And I think that as in any negotiation, one can imagine that when you're a volume-based purchaser, like the federal government in the Medicare program, that ought to give some advantages, and something that people have been suggesting should be done for many years. So, I would expect it to have some positive implications for beneficiaries, and for the coverages, whether it's Medicare Part D plans, whether it's through other insurance coverage that they have to cover pharmaceuticals.

Ultimately, there's a lot of details that will play out: how these negotiations go, how it trickles down into amounts paid out of pocket vs amounts covered by plans and therefore the premiums that are charged for pharmaceutical plan coverage. But I think it is a step in the direction of using ultimately the purchasing power of the federal government through the Medicare program to be able to get better pricing and discounts for seniors.