‘Unprecedented’: How the Inflation Reduction Act of 2022 could impact rheumatology
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It remains up in the air whether the Inflation Reduction Act (IRA) of 2022 will live up to its name in terms of economic impact.
However, what is more certain is that the law contains numerous provisions related to health care that could potentially benefit patients with rheumatic and autoimmune diseases.
Among the IRA’s key provisions is that it gives HHS the authority to negotiate lower drug prices for Medicare. It also provides for free vaccinations to Medicare beneficiaries. However, the timetable for when, and how, these conditions take effect raises questions about the actual impact the law could have in the rheumatology space.
Although the IRA was signed into law by President Joe Biden on Aug. 16, under its provisions, the HHS will not be able to negotiate drug prices for medications covered under Medicare Part D plans — ie, those typically filled at an outpatient pharmacy — until 2026 at the earliest.
According to Allan Gibofsky, MD, JD, of the Weill Medical College of Cornell University and the Hospital for Special Surgery, in New York, it will be another 2 years after that before negotiated prices impact therapies covered under Medicare Part B.
“For medications covered under Part B — which pays for doctor visits, diagnostic tests and other outpatient services, such as chemotherapy and other drug infusions at a hospital or doctor’s office — negotiated prices will take effect in 2028,” he said.
Even then, the ability to negotiate prices will only apply to 10 Part D drugs in 2026. This number will increase to include another 15 Part D drugs in 2027, another 15 Part B and Part D drugs in 2028, and another 20 Part B and Part D drugs in 2029 and beyond.
However, despite the extended timetable, Blair Solow, MD, chair of the American College of Rheumatology’s Government Affairs Committee, is encouraged by the law.
“The main item to highlight in this bill is the ability for Medicare to negotiate drug prices,” she said in an interview. “This, in my opinion, is unprecedented for this measure to come this far. I hope it will have a positive impact in the lives of patients affording their medications.”
Although Gibofsky agreed about the significance of this development, he pointed out that it will only affect Medicare beneficiaries.
“The provisions do not apply to rheumatology patients who are self-pay or patients with commercial insurance,” he said. “Thus, the overall benefit to the health care system is uncertain, especially if costs go up in one segment of patients to offset the cost savings in another.”
Negotiation parameters
Not all drugs will be eligible for negotiation in Medicare. There are two major criteria that must first be met.
The first provision is that drugs cannot have any direct competitors, meaning that there can be no generic equivalent.
“And if it is a biologic drug, there can be no available biosimilar,” Gibofsky noted.
The second key provision is that small molecule drugs must have been approved by the FDA for at least 9 years.
“And biologic agents must have been approved by the FDA for at least 11 years,” Gibofsky added.
Solow stated that although she has some concerns regarding the overall timetable governing Medicare price negotiations — “A lot can change in those few years” — she argued that starting with a few medications and increasing their number each year is “reasonable.”
“This allows time for physicians to adjust processes as needed, particularly for drugs that fall under Part B,” she said. “With Part B meds, physicians give mediations in their office and use a buy-and-bill procedure to pay for the medications as well as storage and handling of the treatments.”
Robert W. Levin, MD, past president of the Florida Society of Rheumatology, president of the Alliance for Transparent and Affordable Prescriptions (ATAP), and associate affiliate professor of medicine at the University of South Florida, also raised some concerns about the prospective Medicare drug price negotiations.
“Of course, in terms of lowering drug prices, we are obviously for it, but there has to be some nuance,” he said. “The margins on Part B drugs are narrow. We are not sure how this is going to play out, especially in the Part B space.”
Levin, who is also on the board of directors for both the Coalition of State Rheumatology Organizations (CSRO) and the American Arthritis and Rheumatology Associates (AARA), fears that if profit margins are not adequately met, the drug may not end up as part of the service at all.
“If that comes to pass, it could limit our ability to get certain drugs for our patients,” Levin said.
Another concern, he added, is that there are not enough details about injection services for rheumatology patients.
According to Levin, the next few years will involve “a lot of rules and rule-making” about this legislation.
“CMS is going to have to figure out how to implement this,” he said.
The good news is that organizations like the ACR, ATAP and CSRO will be involved in the implementation strategy, he added.
“If, in fact, this law can lower prices and maintain that access, potentially it is a good thing,” Levin said.
Although lowering drug prices could have a hugely positive impact on patients’ lives around the country, these are not the only potentially positive impacts of the law.
Positives for patients
Under the IRA, Medicare beneficiaries will be able to access free necessary vaccines for diseases ranging from shingles to COVID-19.
“This will significantly streamline the delivery of this important preventive health effort and will also reduce the administrative burden to seniors,” Gibofsky said.
According to Solow, since many rheumatology patients are immune-suppressed, fewer barriers — such as not having to pay a percent of the vaccine cost — will help increase vaccine uptake and protect more patients in this population.
“Research has shown reducing barriers to obtaining vaccines increases uptake,” she said.
However, for Levin, perhaps the most significant provision in the IRA is that it caps out-of-pocket overall drug costs to $2,000 per year. Beginning in 2025, once that amount is reached, then the patient will not owe any more copays or coinsurance for covered drugs for the rest of the year.
“This is a big positive for our patients,” he said.
According to Levin, many rheumatology patients use various rebate systems and company-based assistance programs that often include copays that can add up.
“Even if you can get patients approved for certain drugs, often they can’t pay for them,” he said.
Meanwhile, patients with rheumatic diseases often require expensive medications that do not have a generic alternative, which results in higher costs before hitting their maximum, Solow added.
In addition, the cap will increase in subsequent years based on Medicare’s annual spending for covered drugs, according to Gibofsky.
“For example, if Medicare spends 5% more, the cap for 2026 would be 5% higher,” he said.
‘The current system is not sustainable’
The Congressional Budget Office has estimated that these provisions will reduce the national deficit by $287 billion through 2031. Included in these figures are $321 billion in gross savings, offset by $34 billion in new spending.
However, in terms of reducing the inflation rate, which at the time of the IRA’s passage was 8.5% year over year, Gibofsky noted that even the bill’s major sponsor and champion in Congress, Sen. Joseph Manchin (D-W.Va.), has stated that the impact will not be immediate.
“Also, the cost-savings estimates are only estimates, and the calculations depend on a closed system analysis, which means that there will be no increased spending for anything else other than the spending mandated on this bill,” Gibofsky said.
He later added that, based on previous patterns of congressional spending, such an event is “highly unlikely.”
“I am of the opinion that just as Rhode Island is neither a road nor an island, the Inflation Reduction Act neither addresses inflation nor its reduction,” Gibofsky said. “George Orwell would be proud of the name chosen.”
For Solow, the law’s impact on the overall economy is beyond the control of rheumatology patients and practitioners. Instead, she underscored the IRA’s potential to expand the pool of patients who qualify for health insurance and lower drug prices for Medicare beneficiaries.
“Despite competition, particularly in the biologic and biosimilar space, we have seen prices rise,” Solow said. “This has a profound impact patients’ cost share. If Medicare successfully negotiates lower prices, patients will have lower percentages they are responsible for. Additionally, often patients would have to pay large amounts all at once. The ability to spread that over the course of the year is more sustainable.”
“With drug prices rising unabated, and there has to be changes to the way we approach pharmaceutical companies,” she added.
Although these tasks will not be easy, that does not make them any less necessary, according to Solow.
“Change is difficult,” she said. “However, the current system is not sustainable. I look forward to seeing how these changes may positively impact Medicare patients accessing their medications.”
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