OBJECTIVES: This study assesses the potential cost-savings of the Inflation Reduction Act (IRA) on diabetes medications in Louisiana Medicare beneficiaries living with Type 2 Diabetes (T2D).

METHODS: This project utilizes 2016-2020 Louisiana Medicare claims data from the Centers for Medicare and Medicaid Services. A cohort of beneficiaries with T2D was created using the chronic conditions file. Using the Part D Events file, the number of patients taking a drug, total costs, and total amount patients paid were extracted for Empagliflozin, Sitagliptin, and Dapagliflozin – T2D drugs in the first year of negotiations - in each year. For each year, this data and the total number of Medicare beneficiaries were used to find and compare the proportion of Medicare beneficiaries with T2D on each of the three drugs. These values were used to calculate future projections of number of beneficiaries on each drug, total cost, and patient costs were forecasted from 2021 to 2030 assuming linear trends to create a base case. Potential cost decreases of 25%, 40%, 50%, and 65% were applied to the base case costs to assess savings between 2025 and 2030.

RESULTS: In 2020, there were 796,004 Medicare beneficiaries in Louisiana and 122,891 were living with T2D. Between 2025 and 2030, the IRA is estimated to save Louisiana Medicare between $188,200,779 and $414,041,714, and patients between $10,607,203 and $23,335,846 from the three T2D drugs. The greatest Medicare savings would be due to Sitagliptin, with Medicare savings between $81,594,162 and $179,507,156 and patient savings between $3,908,491 and $8,598,679. Patients on Empagliflozin will have the largest out-of-pocket savings, between $5,173,381 and $11,381,439, and save Medicare between $78,195,783 and $172,030,723. The IRA may lead to overall costs between $28,410,835 and $62,503,836 and patient savings may total between $1,525,332 and $3,355,729 from Dapagliflozin in Louisiana.

CONCLUSIONS: The IRA may significantly decrease the cost of T2D drugs.