In 2022, the Inflation Reduction Act, or the IRA, was enacted, which, among other provisions, included several measures intended to lower the cost of prescription drugs and related healthcare reforms. Specifically, the IRA authorizes and directs the U.S. Department of Health and Human Services or the DHHS to set drug price caps for certain high-cost Medicare qualified drugs and the first year of maximum price applicability to begin in 2026. The IRA further authorizes the DHHS to penalize pharmaceutical manufacturers that increase the price of certain Medicare drugs faster than the rate of inflation. Finally, the IRA creates significant changes to certain Medicare benefits by capping certain beneficiaries’ annual out-of-pocket spending at $2,000 beginning in 2025.
