Evaluating the Impact of Inflation Reduction Act Provisions on Medicare Advantage Prescription Drug Costs

Research center:
Lead researcher:
Project funded:
September 2023
Anticipated completion date:
August 2024

In response to rising health care costs, the recently passed Inflation Reduction Act (IRA) contains several provisions aimed at reducing prescription drug costs for Medicare beneficiaries, including those enrolled in Medicare Advantage (MA) plans. New benefits take effect over 2023-2025, and the efficacy of these policy changes will need to be assessed to inform future policy decisions.

This study will leverage Merative MarketScan MA plan data to 1) establish baseline measures of prescription drug affordability and 2) evaluate changes in affordability metrics after implementation of key IRA provisions including insulin copays, vaccine cost-sharing, and the out-of-pocket cap. Using 2021-2022 MA claims, researchers will calculate average prices paid for insulin, cost-sharing for vaccines, and total out-of-pocket drug spending. These baseline metrics will be stratified by demographics and rural/urban status (metropolitan statistical area vs. non-metropolitan statistical area). Once post-IRA data are available, researchers will re-measure the same metrics to quantify changes and determine if affordability improved. Additional analyses will model potential savings under the IRA, compare pre-post trends, and assess MA plan benefit design responses.

This study will be among the first to evaluate whether the IRA's drug pricing reforms equitably improve affordability for both rural and urban MA enrollees. Identifying any remaining disparities can inform policymakers on opportunities to further advance health equity through legislation.