Analysts Warn Medicare Drug Price Controls May Limit Access and Raise Costs

The Inflation Reduction Act, enacted in August 2022, created a Medicare Drug Price Negotiation Program that authorizes the government to set prices for certain high-cost prescriptions. Analysts contend that while the policy was marketed as a consumer benefit, it may instead shift costs onto patients through stricter utilization-management tools such as prior authorization and formulary exclusions. Recent IQVIA analysis found that 24% of first-fill attempts for drugs covered under the program were initially rejected, with oncology and immunology drugs facing rejection rates as high as 67% and 59% respectively.

Critics warn that the controls could prompt manufacturers to raise launch prices, accelerate price hikes on non-negotiated drugs, and deter investment in high-risk research, potentially harming long-term biomedical innovation. The Centers for Medicare & Medicaid Services plans to issue a final rule for the program's initial price applicability year 2029 in the fall, aiming to balance affordability with access. A survey of beneficiaries indicated that most expect higher out-of-pocket costs under the law.