DISTRIBUTIVE EFFECTS OF US DRUG PRICING REFORMS: IMPACT ON PATIENTS’ COST BURDEN
Author(s)
Oliver Yao, MSc1, Michael Epstein, MS2;
1Clinigen Inc, Bethesda, MD, USA, 2Clinigen, Webster, NY, USA
1Clinigen Inc, Bethesda, MD, USA, 2Clinigen, Webster, NY, USA
OBJECTIVES: Recent US prescription drug pricing reforms aim to reduce patients’ cost burden. However, we predict limited patient-level out-of-pocket (OOP) savings from both “Most Favored Nation” (MFN) pricing initiatives and Medicare drug price negotiation under the Inflation Reduction Act (IRA), for the following reasons:
Medicaid beneficiaries (MFN):
H1: Medicaid beneficiaries already face nominal or zero prescription drug cost sharing; therefore, even large price reductions are unlikely to generate meaningful OOP savings.
Medicare fee-for-service beneficiaries (MFN and Medicare price negotiation):
H2: Most FFS beneficiaries have supplemental coverage (e.g., Medigap, retiree coverage, or Medicaid) that pays Part B coinsurance, meaning lower drug prices would primarily benefit secondary insurers rather than patients.
Medicare Advantage and Prescription Drug Plan members (MFN):
H3: For MA and PDP members, per-prescription OOP savings from lower drug prices are likely to be offset by slower progression toward plan deductibles or annual OOP maximums.
Medicare Advantage and Prescription Drug Plan members (Medicare price negotiation):
H4: Insurer responses to the IRA—higher Part D deductibles and greater use of coinsurance—are expected to dilute point-of-sale OOP savings.
METHODS: To test these hypotheses, we extracted data from peer-reviewed and grey literature.
RESULTS: Evidence supports H1 and H2: federal law caps Medicaid prescription copays at $4 (preferred) and $8 (non-preferred) for beneficiaries ≤150% FPL; 15 states impose no Rx cost sharing; and pharmacies must dispense regardless of copay payment. Additionally, ~89% of non-institutional Medicare beneficiaries have supplemental coverage or are enrolled in Medicare Advantage. Evidence also supports H4: MA-PD average deductibles increased from $62 (2024) to $224 (2025), and the share of MA-PD enrollees facing coinsurance (vs copays) for preferred brand drugs rose from 2.6% to 27.5%. Evidence for H3 remains limited but is supported by plan design mechanics.
CONCLUSIONS: US drug pricing reforms primarily generate federal and payer savings, with patient OOP relief modest and uneven.
Medicaid beneficiaries (MFN):
H1: Medicaid beneficiaries already face nominal or zero prescription drug cost sharing; therefore, even large price reductions are unlikely to generate meaningful OOP savings.
Medicare fee-for-service beneficiaries (MFN and Medicare price negotiation):
H2: Most FFS beneficiaries have supplemental coverage (e.g., Medigap, retiree coverage, or Medicaid) that pays Part B coinsurance, meaning lower drug prices would primarily benefit secondary insurers rather than patients.
Medicare Advantage and Prescription Drug Plan members (MFN):
H3: For MA and PDP members, per-prescription OOP savings from lower drug prices are likely to be offset by slower progression toward plan deductibles or annual OOP maximums.
Medicare Advantage and Prescription Drug Plan members (Medicare price negotiation):
H4: Insurer responses to the IRA—higher Part D deductibles and greater use of coinsurance—are expected to dilute point-of-sale OOP savings.
METHODS: To test these hypotheses, we extracted data from peer-reviewed and grey literature.
RESULTS: Evidence supports H1 and H2: federal law caps Medicaid prescription copays at $4 (preferred) and $8 (non-preferred) for beneficiaries ≤150% FPL; 15 states impose no Rx cost sharing; and pharmacies must dispense regardless of copay payment. Additionally, ~89% of non-institutional Medicare beneficiaries have supplemental coverage or are enrolled in Medicare Advantage. Evidence also supports H4: MA-PD average deductibles increased from $62 (2024) to $224 (2025), and the share of MA-PD enrollees facing coinsurance (vs copays) for preferred brand drugs rose from 2.6% to 27.5%. Evidence for H3 remains limited but is supported by plan design mechanics.
CONCLUSIONS: US drug pricing reforms primarily generate federal and payer savings, with patient OOP relief modest and uneven.
Conference/Value in Health Info
2026-05, ISPOR 2026, Philadelphia, PA, USA
Value in Health, Volume 29, Issue S6
Code
HPR64
Topic
Health Policy & Regulatory
Topic Subcategory
Health Disparities & Equity, Insurance Systems & National Health Care, Pricing Policy & Schemes, Reimbursement & Access Policy
Disease
No Additional Disease & Conditions/Specialized Treatment Areas