The Inflation Reduction Act

Out-of-Pocket Trends for Maximum Fair Priced Medicines Under the Inflation Reduction Act

Summary:

This analysis, based on real-world prescription and out-of-pocket cost data, documents actual changes in Medicare beneficiaries’ expenditures for the first 24 medicines selected for Maximum Fair Price negotiation under the Inflation Reduction Act.

Although negotiated Maximum Fair Prices do not take effect until 2026 or 2027, the 2025 data already show meaningful shifts in what patients pay. Among prescriptions for which beneficiaries paid more than $0 out of pocket, the average out-of-pocket cost grew for 14 of 24 negotiated medicines, even as total prescription volume and zero-dollar prescription volume also increased. These results suggest that while more beneficiaries may be benefiting from the Inflation Reduction Act’s redesigned benefit and reaching no-cost status, those who continue to face cost-sharing often experience higher average costs. For the 10 medicines without increased out-of-pocket costs, affordability gains may have resulted from market forces beyond the Inflation Reduction Act’s price-setting, including availability of biosimilar or generic competition, voluntary wholesale acquisition price reductions by biopharmaceutical companies, and oncology and rare-disease indicated products. Out-of-pocket cost changes varied substantially among Pharmacy Benefit Managers, reinforcing that plan design, formulary strategy, and market behavior remain major determinants of patient cost exposure. Taken together, these findings suggest that the Inflation Reduction Act is already reshaping incentives across the Medicare drug market. However, early effects on beneficiary affordability are uneven and complex, making continued monitoring of out-of-pocket costs, formulary decisions, and access restrictions essential as negotiated prices take effect.

Objective of Pioneer Institute’s Inflation Reduction Act research:

The objective of the Pioneer Institute’s Inflation Reduction Act (IRA) research is to evaluate:

• Changes in actual out-of-pocket (OOP) costs of the maximum fair price (MFP) designated drugs, and
• Changes in tier and administrative burden of the MFP designated drugs

Introduction:

This research initiative examines how the IRA is reshaping Medicare Part D drug affordability, with particular attention to medicines selected for Medicare drug price negotiation under the MFP framework. The IRA, signed into law on August 16, 2022, introduced several major reforms to prescription drug coverage, including:

• A $2,000 OOP cap for Medicare beneficiaries,
• Elimination of cost-sharing for recommended adult vaccines under Part D,
• Changes to the Part D benefit design,
• Assessment of inflation penalty on biopharmaceutical companies that raise prices above the inflation rate, and
• Medicare drug price negotiation for selected high-spend products.

Although these reforms were intended to improve affordability for patients, they also changed financial incentives across the drug supply chain in ways that may not uniformly reduce what beneficiaries pay.

The current biopharmaceutical pricing system generates revenue not only for manufacturers but also for a range of intermediaries, also referred to as “middlemen”, whose income is tied, directly or indirectly, to higher list prices and associated rebates, fees, and concessions. These entities include Pharmacy Benefit Managers (PBMs), insurers, hospitals, wholesalers, healthcare providers, public payers, benefit consultants, and employers. As a result, policies that reduce Wholesale Acquisition Cost (WAC) (i.e., list prices of medicines) linked revenue may trigger responses across the supply chain that do not necessarily improve patient affordability.

Slide 1 frames the broader ecosystem of entities that benefit from increases in drug prices and spending in the U.S. Since intermediary revenue streams are tied to WAC prices, to preserve profitability, these entities, specifically PBMs and insurers, will have to respond in ways that may be contrary to patient affordability and access to life-saving medicines.

Changes introduced by the IRA related to biopharmaceuticals:

The principal IRA provisions that may directly or indirectly affect beneficiary cost exposure include the following.

• $2,000 OOP cap for seniors.
  • Most Medicare beneficiaries were already below this threshold of $2000.[1][2]
  • Non-low-income subsidy (LIS) patients, the average OOP in 2021 was $463.[3]
• Elimination of OOP costs for vaccines under Medicare Part D.
  • Previously, Medicare Part D patients were the only insured group in the U.S. required to pay OOP for vaccines.
  • In 2023, 10.3 million Medicare Part D enrollees received a recommended vaccine free of charge, which saved enrollees more than $400 million.[4]
• Capping Medicare Part D “Base Beneficiary” premium increases to 6% annually.
  • From 2010 to 2022, Medicare Part D premiums were relatively flat.[5]
• Medicare drug price negotiations implementation of MFP.
  • The Congressional Budget Office (CBO) predicts this could reduce new drug development by limiting financial incentives for innovation.[6]
• Inflation penalty on drug price increases.
  • Intended to curb excessive price hikes, this penalty may push manufacturers to launch new drugs at higher initial prices.[7]
  • Similar arrangements are already in place for Medicaid and, to some extent, in commercial plans.[8]
• Shift in financial risk to PBMs.
  • The IRA could transfer some financial risk from patients and the federal government to PBMs, potentially reducing government spending but increasing cost pressures on PBMs.[9]
• Leveling of OOP payments.
  • The IRA spreads OOP costs evenly over 12 months, making expenses more predictable for patients.[10]
• Shorter exclusivity for small molecules (9 Years) vs. large molecules (13 Years) for MFP designation.
  • This policy may shift investment toward large molecules, increasing overall drug spending.[11]^{, [12]}
• Capping insulin OOP costs.
  • This provision codifies existing voluntary caps set by biopharmaceutical companies into federal law.[13]

Potential impact of IRA:

• Increased financial exposure of PBMs
  • The Medicare Part D design shift places a greater financial burden on PBMs.[14]
• Reduced profitability due to lower prices
  • MFP pricing is significantly lower than WAC.[15]
  • PBMs retain a percentage of rebates and fees but pass an unknown amount of the concessions to plan sponsors and ultimately Medicare.[16]
• IRA followed the American Rescue Plan, which removed the Medicaid average manufacturer price (AMP) cap.[17]
• IRA Preceded the Trump Administration’s introduction of the Most Favored Nation (MFN) pricing, which has now been agreed upon by some biopharmaceutical companies for Medicaid pricing^.[18],[19]
• IRA, in combination with the removal of Medicaid AMP Cap and implementation of MFN, has created an impetus for biopharmaceutical companies to re-evaluate their pricing policies for certain medicines.[20]
• The reduction of WAC Prices or MFP prices will have a material impact on the revenue or indirect economic health of other entities that benefit from higher prices beyond PBMs and insurers

Potential PBM responses to IRA due to the institution of MFP prices, which impact how much money they make through retention of rebates and lower fees:

• Increase patient cost-sharing by raising OOP expenditures on MFP drugs and, potentially, all drugs.
• Request additional concessions from manufacturers for the MFP drugs.
• Increase administrative barriers, such as prior authorization and step therapy, that reduce access to medications for all covered medicines.
• Raise premiums and OOP costs to the maximum allowable amount.
• Demand concessions for drug classes that previously did not require them, such as vaccines.
• Demand additional concessions from manufacturers for drugs not included in the MFP price-setting list.
• Exclude certain drugs from formularies, thereby restricting patient access.
• Implement policies in the commercial sector, such as a reduction of rebate guarantees for employers that influence premiums and commercial plan spending.

Methodology and Data Acquisition:

To assess whether these incentive changes were already reflected in beneficiary experience, Pioneer Institute analyzed real-world Medicare prescription and OOP cost data for the 24 selected non-insulin medicines.

• Pioneer Institute acquired real-world per-prescription OOP cost, and the number of prescriptions dispensed data from IQVIA for Medicare plan years 2024 and 2025 for the 24 MFP designated drugs.
• We excluded insulins from all calculations due to the OOP price cap being codified through the IRA for Medicare Part D and voluntarily by insulin manufacturers for all patients.
• Data acquisition was from the 4 largest PBMs:
  • CVS Caremark (CVS),
  • Express Scripts International (ESI),
  • Humana,
  • OptumRx (ORx)
• WAC changes were gathered from 46Brooklyn.com
• Benefit design information was gathered from CMS data files.
  • Pioneer Institute followed the tier and administrative burden changes for all 24 MFP drugs.
• Calculation of weighted average OOP cost for all prescriptions greater than $0
  • Pioneer Institute acquired weighted OOP data for all prescriptions based on $25 increments (e.g., $0, .01$ – 24.99, $25 – $49.99, etc.).
  • Prescription volume for the OOP cost range multiplied by the weighted average cost equaled revenue.
  • The sum of the revenue divided by the sum of prescription volume equaled the weighted OOP cost per prescription.

Results (Slides 2 – 7):

The early findings show a mixed but important pattern. Before negotiated MFP prices took effect, the average OOP cost for prescriptions with cost-sharing increased for most of the selected medicines, even as zero-dollar prescription volume also rose. This suggests that the IRA’s early effects on affordability are uneven, and aggregate gains may mask higher cost exposure for beneficiaries who continue to face cost-sharing.

Among prescriptions with OOP costs greater than $0, the average OOP cost increased for 14 of 24 negotiated medicines in 2025 compared to 2024 and decreased for 10 of 24.

The data also demonstrates that the total prescription volume and zero-dollar prescription volume both increased from 2024 to 2025 for the negotiated drug groups. These utilization patterns suggest that more beneficiaries are reaching zero-cost status or otherwise obtaining prescriptions without direct cost-sharing. Still, those who continue to pay OOP often face higher average amounts.

Drug Level PBM-specific Results

Group 1 Changes in OOP cost 2025 vs 2024

• Eliquis: overall average OOP cost was essentially flat (+2%), going from $76.96 to $78.16; PBM-level results varied: CVS (−3%) and Humana (−2%) were essentially flat, and ORx (−9%) decreased modestly, whereas ESI (+15%) increased.
• Enbrel: overall average OOP cost rose substantially (+32%), going from $732.53 to $967.73, with large increases by ESI (+54%), CVS (+38%), and ORx (+37%), whereas Humana (+6%) increased modestly.
• Entresto: a generic version became available in 2025; overall average OOP cost decreased modestly (−6%), going from $77.55 to $72.53; PBM-level results varied, with Humana (−18%), ORx (−13%), and CVS (−4%) decreasing, whereas ESI (+7%) increased.
• Farxiga: overall average OOP cost rose sharply (+23%), going from $69.09 to $85.03; PBM-level results varied, with Humana (+64%), ESI (+32%), and ORx (+9%) increasing, whereas CVS (−2%) was essentially flat.
• Imbruvica: overall average OOP cost fell sharply (−20%), going from $1,588.71 to $1,273.95, with decreases by all four major PBMs: Humana (−28%), ESI (−22%), CVS (−19%), and ORx (−14%).
• Januvia: Januvia WAC was reduced substantially (−42%) in January 2025 by the manufacturer; overall average OOP cost dropped modestly (−11%), going from $52.72 to $46.67, with varying decreases across all four major PBMs: CVS (−21%), Humana (−17%), ESI (−7%), and ORx (−6%).
• Jardiance: overall average OOP increased modestly (+4%), going from $65.53 to $67.64 (+4%); PBM-level results varied, with ESI (+28%) increasing, Humana (−14%) decreasing, and CVS (−3%) and ORx (−1%) essentially flat.
• Stelara: multiple manufacturers introduced biosimilar versions in the second quarter of 2025; overall average OOP cost fell (−21%), going from $721.57 to $572.42, with similar decreases across all four major PBMs: CVS (−30%), ORx (−21%), ESI (−19%), and Humana (−18%).
• Xarelto: overall average OOP was essentially flat (+1%), going from $77.92 to $78.57; PBM-level results varied, with ESI (+15%) increasing, ORx (−10%) and Humana (−6%) decreasing modestly, and CVS (+1%) remaining essentially flat.

Group 2 Changes in OOP cost 2025 vs 2024

• Austedo: overall average OOP costs increased from $562 to $661 (+18%), with increases across all PBMs, ranging from modest increases by CVS (+6%) and Humana (+5%) to large increases by ESI (+24%) and ORx (+40%).
• Breo Ellipta: overall average OOP rose from $59 to $69 (+17%); PBM-level results varied, with increases by ESI (+24%), ORx (+23%), and Humana (+9%), whereas CVS was essentially flat (+1%).
• Calquence: overall average OOP fell from $1,595 to $1,335 (−16%), with decreases by all four major PBMs: Humana (−28%), OptumRx (−19%), CVS (−12%), and ESI (−12%).
• Ibrance: overall average OOP decreased from $1,574 to $1,288 (−18%), with all PBMs showing large reductions: Humana (−26%), CVS (−25%), ESI (−17%), and ORx (−12%).
• Janumet: Janumet had a large WAC decrease (−42%) in 2025; overall average OOP fell from $51 to $45 (−12%), with decreases by all four major PBMs: CVS (−25%), Humana (−17%), ESI (−8%), and ORx (−4%).
• Linzess: overall average OOP increased from $59 to $63 (+8%); PBM-level results varied: with  ORx (+20%), Humana (+19%), and ESI (+7%), increasing, whereas CVS (−21%) had a large decrease.
• Ofev: overall average OOP dropped from $1,621 to $1,205 (−26%), with large decreases by all four major PBMs: CVS (−31%), Humana (−30%), ESI (−23%), and ORx (−19%).
• Otezla: overall average OOP climbed from $600 to $789 (+31%), with large increases by all four major PBMs: ORx (+41%), ESI (+38%), Humana (+29%), and CVS (+22%).
• Semaglutide products (Ozempic/Rybelsus/Wegovy): overall average OOP was essentially flat, rising from $97 to $98 (+1%); PBM-level results varied remarkably: ESI (+33%) increased largely, whereas CVS (−1%) was essentially flat and Humana (−21%) and ORx (−13%) had large decreases.
• Tradjenta: overall average OOP increased from $47 to $52 (+9%), PBM-level results varied, with large increases by ESI (+20%) and ORx (+20%), and modest decreases by CVS (−8%) and Humana (−6%).
• Trelegy: overall average OOP rose from $71 to $76 (+7%), PBM-level change varied, with a large increase by ESI (+21%) and minimal changes by ORx (+4%), Humana (+1%), and CVS (−1%).
• Vraylar: overall average OOP increased sharply from $106 to $155 (+46%), with increases by all PBMs: ORx (+65%), Humana (+54%), ESI (+45%), and CVS (+10%).
• Xifaxan: overall average OOP rose from $373 to $467 (+25%), with increases across all four major PBMs: ESI (+32%), ORx (+29%), Humana (+21%), and CVS (+9%).
• Xtandi: overall average OOP fell from $1,596 to $1,134 (−22%), with decreases by all four major PBMs: Humana (−28%), CVS (−25%), ESI (−18%), and CVS (−18%).

Discussion:

These results should not be interpreted as evidence that negotiated MFP prices are already lowering beneficiary costs, because the negotiated prices do not take effect until 2026 or 2027. Instead, the 2025 patterns likely reflect the interaction of the $2,000 annual OOP cap, Part D benefit redesign, PBM, and plan benefit design choices, and broader market dynamics. The findings suggest that while some beneficiaries with very high prescription-level cost exposure may benefit from the IRA, others taking lower-cost brand or generic medicines may still experience higher average OOP spending. The substantial PBM-level variation further indicates that plan strategy remains a major determinant of what patients actually pay.

These findings are also directionally consistent with prior Milliman analysis, suggesting that growing risk for Part D plan sponsors may lead to additional strategies to offset plan costs, including higher patient cost-sharing.

“Underwriting risk for Part D plan sponsors is increasing materially, and further acceleration of strategies to offset plan costs and increase patient costs (e.g., increase deductibles, switch to coinsurance for brand drugs) may continue into 2026 and beyond.”[21]

The findings also suggest that OOP reductions were concentrated where other market explanations were already present, such as voluntary WAC reductions, biosimilar entry, and pending generic competition or oncology and rare-disease indicated products (Slide 8). That is analytically important because it helps distinguish correlation from causation. The research makes a credible case for continued monitoring rather than premature conclusions.

Policy Relevance:

The broader policy relevance of the presentation is clear. As PBMs face lower revenue from negotiated medicines due to lower retention of rebates, fees, or other concessions and higher liability due to benefit re-design, they may try to recover losses through increased cost-sharing, administrative restrictions, or more aggressive concession demands elsewhere in the market. These findings support continued scrutiny of formulary design, cost-sharing, and utilization management as the IRA’s negotiation provisions move into full implementation.

Looking ahead, Pioneer Institute plans to continue monitoring OOP cost changes through 2026 for the first two sets of MFP-designated medicines. Moreover, Pioneer Institute proposes additional analyses comparing PDP and MA-PD plan behavior, medication switching, assessing average OOP among non-LIS patients, evaluating changes in generic OOP, and studying premium changes for non-LIS beneficiaries. Those next steps would materially strengthen the evidence base by helping separate plan-type effects, beneficiary subgroup effects, and product-market effects.

Conclusion

In summary, the Pioneer Institute research provides an early empirical look at how IRA policies may be impacting Medicare beneficiaries’ OOP drug costs for MFP-designated drugs. The research does not show that negotiated prices are already reducing costs; rather, it demonstrates that before MFP implementation begins, beneficiary experience is already shifting in complex and uneven ways. While zero-dollar prescription volume increased substantially, average OOP costs among those who still paid more than $0 increased for most of the negotiated medicines studied. The drugs that showed OOP cost reductions tended to have distinct market features, such as oncolytic medicines, biosimilar or generic competition, or voluntary WAC cuts. PBM-level variation was substantial, reinforcing the likelihood that benefit design and plan strategy remain powerful determinants of what patients actually pay.

Taken together, the findings support a cautious but important conclusion that transparent monitoring of OOP costs, formulary coverage, and access barriers will be essential as the IRA’s negotiation provisions move from anticipation into full operational effect in 2026 and 2027.

[1] https://www.kff.org/medicare/millions-of-people-with-medicare-will-benefit-from-the-new-out-of-pocket-drug-spending-cap-over-time/

[2] https://www.milliman.com/en/insight/moop-2025-part-d-beneficiaries-spending

[3] https://www.kff.org/medicare/state-indicator/average-out-of-pocket-spending-by-medicare-part-d-enrollees-by-lis-subsidy-status/?currentTimeframe=0&selectedDistributions=no-lis&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

[4] https://aspe.hhs.gov/sites/default/files/documents/25c8a374dfc934060bfd88c08b1d5971/part-d-covered-vaccines-no-cost-sharing.pdf

[5] https://www.statista.com/statistics/939663/average-monthly-premium-costs-for-medicare-pdps-us/

[6] https://www.cbo.gov/system/files/2022-01/57450-Drug.pdf

[7] https://www.cbo.gov/system/files/2023-02/58850-IRA-Drug-Provs.pdf

[8] https://www.kff.org/medicaid/5-key-facts-about-medicaid-prescription-drugs/?utm_source=chatgpt.com

[9] https://www.kff.org/medicare/a-current-snapshot-of-the-medicare-part-d-prescription-drug-benefit/?utm_source=chatgpt.com

[10] https://www.medicare.gov/publications/12211-whats-the-medicare-prescription-payment-plan.pdf

[11] https://www.biospace.com/the-ira-is-already-curtailing-small-molecule-drug-development-here-s-how-to-reverse-that

[12] https://www.cnbc.com/2024/03/10/pfizer-is-betting-big-on-cancer-drugs-after-covid-decline.html

[13] https://investor.lilly.com/news-releases/news-release-details/lilly-cuts-insulin-prices-70-and-caps-patient-insulin-out-pocket

[14] https://advisory.avalerehealth.com/insights/ira-question-of-the-week-how-will-the-law-impact-plans-and-pbms

[15] Sydor AM, Rivera E, Popovian R. Could the Inflation Reduction Act Maximum Fair Price Hurt Patients? J Health Econ Outcomes Res. 2024;11(2):154-160. doi: 10.36469/001c.125251. PMID: 39629268; PMCID: PMC11612897. https://jheor.org/article/125251-could-the-inflation-reduction-act-maximum-fair-price-hurt-patients

[16] https://www.americanprogress.org/article/5-things-to-know-about-pharmacy-benefit-managers/

[17] https://www.cms.gov/newsroom/fact-sheets/misclassification-drugs-program-administration-program-integrity-updates-under-medicaid-drug-rebate

[18] https://www.whitehouse.gov/fact-sheets/2025/12/fact-sheet-president-donald-j-trump-announces-largest-developments-to-date-in-bringing-most-favored-nation-pricing-to-american-patients/

[19] https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-president-donald-j-trump-launches-trumprx-gov-to-bring-lower-drug-prices-to-american-patients/

[20] https://www.mintz.com/insights-center/viewpoints/2146/2024-02-16-mintz-ira-update-removal-amp-cap-medicaid-rebates-causes

[21] https://www.milliman.com/en/insight/moop-2025-part-d-beneficiaries-spending