Summary of Inflation Reduction Act of 2022: Key Drug Pricing Provisions and Implementation Timeline

August 17, 2022

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (IRA), enacting into law the most significant reform for the payment of drugs and biologicals since the creation of the Medicare Part D program as part of the Medicare Modernization Act of 2003 (MMA). The drug pricing provisions in Subtitle B of Title I of the IRA, entitled “Prescription Drug Pricing Reform,” are the culmination of a multi-year effort by the Biden Administration and Congress to enact government price negotiation authority for the Medicare program and, according to the bill sponsors, lower costs for seniors. While the legislation is now enacted, many issues and questions remain regarding its implementation, which will be done through a combination of guidance, program instruction, agreements with manufacturers, and notice-and-comment rulemaking. The first drug pricing provisions to take effect are the Part B and Part D inflationary rebates and insulin cost-sharing caps beginning in 2023, followed by the Part D out-of-pocket cost cap in 2024. While much of the implementation work will be started by the Biden Administration in 2023 and 2024, key provisions including price negotiations do not become effective until 2026 and may be impacted by the 2022 mid-term elections and the 2024 Presidential election.

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