Will IRA increase CMS drug spending?

from Healthcare Economist at https://bit.ly/4bA5mdV on May 23, 2024 at 06:08PM

Potentially so, argues Adam Fein of Drug Channels. There are two mechanisms for this. First, for drugs not covered in the maximum fair price negotiations, Fein argues that drugs with high list prices and large rebates would lead to more net savings compared to drugs with lower list price and rebates in part because in the Part D catastrophic phase, manufacturers pay 20% of gross drug cost and the government covers 20% of gross drug cost. Second, for drugs included in the IRA price negotiations, while gross prices certainly will fall, drug manufacturers no longer will have to pay rebates. Thus, the net price for drugs included in the MFP negotiations may actually be higher than would be the case without MFP. The video is interesting throughout.

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