AUA Urology Advocacy Summit 2023: Need to Know: Inflation Reduction Act of 2022 and its Impact on Urology

( To conclude the 2023 AUA Summit, Erika Miller, JD provided a broad review of the changes to the Centers for Medicare and Medicaid services (CMS) prescription drug program contained within the recently passed “Inflation Reduction Act” (IRA).

Miller began by outlining the specifics of Medicare Part D (MPD) benefit redesign that focused on reducing patient costs. In 2024, the IRA caps out-of-pocket spending for patients at $3,250 per year through the elimination of coinsurance above the catastrophic threshold; further, by 2025, the IRA caps out-of-pocket spending for patients at $2,000 per year. Patient out-of-pocket costs can also be paid over the course of the year as opposed to in one lump sum. If a patient’s cost exceeds the cap in 2025 and beyond, manufacturers are required to provide a 20% discount on brand-name drugs, as well as a 10% discount on brand-name drugs between the deductible and out of pocket cap. Lastly, Part D premium increases cannot exceed 6% from the prior year from 2024-2030.

Next, Miller explained that the IRA implements a new rebate that manufacturers must pay to Medicare in the event that a drug price increase exceeds the rate of inflation. The rebate amount will be determined by the units of the drug sold to Medicare multiplied by the price difference between the actual drug price and the inflation adjusted amount. These rebates will go into effect on October 1, 2022 for MPD, and January 1, 2023 for Medicare Part B (MPB).

A novel aspect of Medicare drug pricing that Miller emphasized within the IRA was the ability to negotiate with manufacturers. However, she underscored the new CMS practices that will be implemented. Instead of following prior Medicare practice that consisted of a notice and comment process, during which stakeholders are able to comment on a notice for 60 days, after which point CMS proposes a final rule, Medicare will now use a guidance process, similar to the Federal Drug Administration. She emphasized that CMS is still encouraging public engagement from all stakeholders, and plans to conduct three information collection requests: 1) small biotech exception, 2) negotiation data elements, 3) offer and counteroffer exchange.

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Negotiations will be limited to a scaled number of drugs (for MPD starting with 10 in 2026, and expanding to 20 in 2030) that are selected from the 50 drugs with the highest Medicare spending rates. There will be certain drugs exempt from negotiation based on specific criteria, including but not limited to those with an available biosimilar or generic or an orphan designation. Ultimately, the Health and Human Services Secretary will have the authority to set a drug’s fair price, taking into account research and development costs, unit costs, federal assistance and financing for development, and market data.

Lastly, Miller provided an overview of MPB drugs utilized by urologists and noted the specific ramifications for MPB drugs that are purchased by urologists prior to administration to patients. When negotiating drug prices, CMS will reimburse physicians at the current price rate, even if the drug was purchased in the previous year, with practices held financially responsible for the price difference.

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In conclusion, the recent passage of the IRA will certainly change the prescription drug landscape for Medicare beneficiaries. Urologists must be aware of how this new legislation can potentially affect their practices and patients.

Presented by: Erika Miller, JD, Cavarocchi Ruscio Dennis Associates, LLC

Written by: Ruchika Talwar, MD, Urologic Oncology Fellow, Vanderbilt University Medical Center, @RuchikaTalwarMD during the 2023 AUA Annual Urology Advocacy Summit, Washington, DC, February 27 – March 1, 2023