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Healthcare provisions in the Inflation Reduction Act

From negotiated drug prices to Medicare Part D redesign, the law will transform a key health benefit program

What’s changing for Medicare plans, pharmaceutical manufacturers, and other healthcare stakeholders?

It’s the most significant change to prescription drug financing since the creation of Medicare Part D. Enacted in 2022, the Inflation Reduction Act will gradually phase in key amendments, including government negotiation of drug prices, a new cap on Medicare Part D cost sharing, and penalties for pharmaceutical manufacturers that raise prices faster than inflation. Our research and analysis break down the implications and offer guidance to help health plans, pharmacy benefit managers, and pharmaceutical companies adapt.

An overview of the new healthcare regulations


The Inflation Reduction Act’s key reforms

Get an overview of the law’s main changes to Medicare and other healthcare markets, and a timeline for implementation.

Read the article

Our experts’ analysis and guidance on the IRA

Milliman healthcare leaders discuss the law’s provisions and their potential impact on payers, drugmakers, and other stakeholders.

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Lessons from the first drugs chosen for Medicare price negotiation

The Inflation Reduction Act requires drug manufacturers to negotiate prices with the federal government, a change with wide-ranging implications for the pharmaceutical industry and healthcare payers.

View the paper


How should pharmaceutical manufacturers strategize, given the new IRA provisions?

As drugmakers adapt to insulin copay caps, rebate penalties, and more regulatory provisions that impact pricing, we lay out key items to watch and offer preparation strategies.

Read the article

How the IRA affects Medicare Part D risk and claim costs

Milliman’s actuaries analyzed how the new Medicare Part D benefit redesign will affect plan liability and risk for health plan sponsors and present risk-mitigation strategies.

See our findings
Payer perspectives

Preparing for the next Medicare bid cycle

As more IRA changes take effect, these areas may require additional analysis for payers.

Area What Why
Plan-specific forecast Forecast plan cost headwinds and changes for plan-specific populations Highlights risk changes, areas of concern, and potential bid amounts
Market landscape analysis Estimate impacts to each market segment and national averages / low-income benchmarks Need market averages to estimate Part D premium changes
Cohort profitability Identify key cohort contributors to profits and losses Inform strategy for member targeting and management
Competitive intelligence Monitor benefits, formularies, and strategy changes for 2024 May indicate early signaling of strategic changes for 2025 and beyond
Risk score changes Estimate actual and/or potential changes to risk scores for plan and market Inform strategy for member targeting and focus efforts for diagnosis coding
Private reinsurance Assess risk tolerance given changes in federal reinsurance and risk corridors Decide whether to pursue private reinsurance to mitigate downside risk
Formulary strategy Adjust formulary designs to adapt to the new Part D environment Formulary is a key tool in controlling costs and attracting the right population to a plan

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