The Effect of the Inflation Reduction Act (IRA) on Benefit and Formulary Design, Including Drug Coverage and Selection, for Medicare D and Commercial Patients in the United States


Runyan A1, Gonzalez B2, Santos R1, Merkert J1, Honcz J3, Murali Dhar K3
1Envision Pharma, San Diego, CA, USA, 2Envision Pharma, Lake Elsinore, CA, USA, 3Envision Pharma, Glastonbury, CT, USA

Presentation Documents


The Inflation Reduction Act (IRA) was signed in August 2022. It includes changes to the Medicare Part D program such as increased payer cost exposure during the catastrophic coverage phase, 6% caps on premium increases, and a $2,000 patient out-of-pocket spending cap. With this research, we aimed to understand how US payer organizations’ Medicare Part D formularies and benefit design may be impacted by the IRA as well as any spillover that may impact commercial patients.


Secondary research was conducted to understand the implications of the IRA. Based on research results, a discussion guide was developed which focused on questions related to how payers would respond to the increased costs to their plans. In-depth telephone interviews were conducted with 15 Pharmacy Directors at managed care organizations (MCOs) and pharmacy benefit managers (PBMs). Data was synthesized and conclusions were drawn about the possible consequences of the IRA.


Payers are preparing for increased costs resulting from the IRA in several ways, but each risk mitigation strategy poses a challenge. First, premium increases can be used to offset costs, but the 6% premium cap limits this. Another concern is payers will aim to keep premiums in line with their competitors. In Medicare, payers are restricted in their ability to increase copay and coinsurance levels. In addition, the new $2,000 patient out-of-pocket cap will impact Medicare Part D payers. Two ways that payers may adjust is to restrict formulary choice for members and impose more stringent utilization management criteria. Finally, payers with commercial books of business may change commercial plan benefit design and formularies to absorb some of the costs across their books of business.


The IRA is intended to provide better quality and more affordable healthcare. However, there may be unintended outcomes resulting in fewer treatment options and higher costs for certain patients.

Conference/Value in Health Info

2023-05, ISPOR 2023, Boston, MA, USA

Value in Health, Volume 26, Issue 6, S2 (June 2023)




Health Policy & Regulatory

Topic Subcategory

Pricing Policy & Schemes, Reimbursement & Access Policy


No Additional Disease & Conditions/Specialized Treatment Areas

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