The Inflation Reduction Act (IRA) promised lower costs for Medicare beneficiaries on drugs selected for price negotiation. However, gamesmanship by middlemen in the complex U.S. healthcare system has stopped the law short of delivering on that promise – instead, patients are seeing higher out-of-pocket costs and increased barriers to access for medicines.
I must have a brand-name version of a heart medicine because the generic version causes unexpected and dangerous side effects. One therapeutic alternative even left me paralyzed in my right hand for a week. For me and millions of others, losing access to a treatment that keeps symptoms at bay and prevents frightening reactions that worsen quality of life would be devastating.
While I’m grateful to have found a treatment that consistently works for my heart condition, it comes at a cost – both through increased prices and an insurance premium that gets more expensive each year. Between 2023 and 2025, my monthly premium rose by over 250%. That cost increase is already significant and beyond what most patients can afford to keep up with treatments that keep them healthy. Yet, drug price negotiation in Medicare threatens to increase further what patients like me pay for the treatments we need.
At this point, 25 drugs that are highly utilized in Medicare have been selected for negotiation, and new prices for the first ten drugs went into effect in January 2025. While these new prices – known as Maximum Fair Prices (MFPs) – mean that the government pays less for Medicare beneficiaries’ treatments, those savings have not translated into lower costs for patients. With lower prices, as the IRA shifts financial risk away from the federal government, there are increased cost pressures on health system middlemen – known as pharmacy benefit managers (PBMs) – that greatly affect patients.
PBMs work within our complex healthcare system to negotiate discounts on the purchase of medicines from drug manufacturers. A report from the Federal Trade Commission (FTC) found that the three largest PBMs marked up specialty generic drugs by thousands of percent – driving up costs for patients, employers, and other health plan sponsors while generating significant revenue for themselves. Higher drug prices enable PBMs to negotiate down and pocket enormous rebates as profit. However, lower prices of drugs selected for negotiation in Medicare mean that PBMs will look elsewhere to make up that profit, and patients will pay the price.
A recent Pioneer Institute study demonstrates how patients are shouldering the burden of price negotiation, finding that the average out-of-pocket cost for nine of the first ten drugs selected for negotiation rose by 32 percent. That is just the beginning of the price increases patients will see as PBMs and other middlemen look to make up their profits in a changing landscape.
The burdens extend beyond the strain on American patients’ wallets. High costs at the pharmacy counter can cause prescription abandonment and lower treatment adherence – worsening patient health outcomes and driving up long-term costs in other parts of the healthcare system.
Even provisions that have been applauded for how they were expected to improve access to care for patients are falling short, such as the $2,000 annual out-of-pocket cost limit for Medicare beneficiaries. Only an estimated five percent of Medicare beneficiaries will benefit from the cap, while the majority will face higher costs due to structural changes in plan design, according to the USC Schaeffer Center for Health Policy & Economics.
Each year, to access the provider-recommended treatment for my heart disease, I manage the burdensome process of prior authorization, which requires my doctor to seek approval from my health plan upon prescribing a medication. Prior authorization is just one of several utilization management (UM) tactics that health plans use to push patients away from the medicines their physicians prescribe and toward medicines that are most profitable for the plan.
Research shows that health plans’ use of UM criteria often does not align with recommendations from clinical practice guidelines, prioritizing cost containment for payers over patient health outcomes or provider expertise. On top of price negotiation, the use of UM tactics increases the administrative burden on both providers and patients and makes patient access to treatments recommended by doctors and clinical guidelines even more challenging.
In the past, I had to take a plea for coverage to an administrative law judge after other efforts to access the treatment I needed were unsuccessful. The stakes are high, and I have spent significant time and resources fighting for coverage of the medicine I need. But not everyone can.
By failing to put in place adequate guardrails to ensure middlemen can’t game the system to generate the most profit for themselves, CMS is leaving patient access to essential medicines at the mercy of a handful of profiteering corporations.
CMS must ensure that payers and PBMs cannot use a policy intended to help patients to maximize their own profits, all while costing patients more. By increasing out-of-pocket costs and instituting additional barriers to access, health plans and middlemen are putting the health of American patients in jeopardy.
Mellanie True Hills is a patient with atrial fibrillation, the founder and CEO of the American Foundation for Women’s Health and StopAfib.org, and the author of A Woman’s Guide to Saving Her Own Life.
