As you are aware, Congress recently passed the Inflation Reduction Act of 2022 (IRA) that has wide ranging implications for many industries, including healthcare. Much discussion has focused on the provision enabling the Department of Health and Human Services (HHS) to negotiate the prices of certain drugs. HHS recently announced the first ten drugs subject to negotiation and the list included ibrutinib (Imbruvica), an oral agent used primarily in the treatment of chronic lymphocytic leukemia (CLL). The negotiated price of Imbruvica will take effect in 2026.

Additional meaningful changes in the way Medicare administers Part D benefits will phase in beginning in 2024. By 2025, the IRA caps Medicare beneficiary annual out-of-pocket (OOP) spending at $2,000. As a result, liability for Part D drug costs change substantially such that the share of costs borne by Medicare Part D plans will increase from 15% to 60% above the spending cap. This is a particular consideration for members with cancer given the high costs of oral anti-cancer and supportive care agents.

Additionally, the IRA mandates that drug manufacturers pay rebates for an array of Part B and Part D drugs with prices that rise faster than the rate of inflation. In light of this new pricing limitation, manufacturers are widely expected to increase launch prices.

You’re likely wondering how the IRA will impact your plan’s oncology cost trend given the variety and complexity of changes phasing in over time.  In the near term, we expect increased exposure to Part D risk to increase the need for plans to manage oncology drug spend holistically and to react quickly to market changes.

OncoHealth is closely monitoring manufacturer and other stakeholder responses to the IRA, as well as the first round of negotiations, which are expected to conclude on August 1, 2024. It goes without saying that we are eager to share our observations and insights with you and your teams. We believe it is more important than ever for health plans to maintain comprehensive, oncology-specific utilization management programs that incorporate review of full treatment regimens, whether the individual drugs will be billed on the Part B or Part D benefits or both. Given the increasing complexity introduced by the IRA, we expect optimal utilization management strategies to frequently cut across the two benefit types.

If you would like to learn more about the IRA or to explore adding oncology pharmacy benefit coverage to your UM program, please reach out to your dedicated OncoHealth client success director.

Sincerely,

Andrew Norden, MD, MPH, MBA
Chief Medical Officer, OncoHealth