Are the IRA’s Part B inflation rebates lowering costs for Medicare patients? No.

Following the passage of the Inflation Reduction Act (IRA), certain medicines covered by Medicare Fee-For-Service (FFS) Part B are now subject to an "inflation rebate" that requires drug manufacturers to pay the government rebates on these medicines if their price increases faster than the rate of inflation. Each quarter since the Part B inflation rebates have been in place, the administration has made misleading claims about savings for Medicare Part B patients. But those savings don't benefit most patients.

A new study from Avalere finds the impact of inflation rebates for patients covered under traditional Medicare taking Part B medicines has been minimal, despite claims from the administration. Just 0.1% - 0.2% of these Medicare patients may experience out-of-pocket cost savings from the Part B inflation rebates. Why? According to the analysis of traditional Medicare Part B patients:

• Only 5% of patients took one or more of the medicines impacted by the inflation rebates in Q3 2024 because only about 10% of Part B medicines have been impacted at all. And those medicines that are impacted are largely not taken by many Part B patients.
• 90% of patients have supplemental insurance that already covers most or all of their out-of-pocket costs. So, while the inflation rebates may lower the cost sharing for impacted Part B medicines in traditional Medicare, most traditional Medicare patients are not paying much (or any) of that cost sharing to begin with.

The kicker: Not only are more than 99% of traditional Medicare patients not seeing any out-of-pocket savings on their Part B medicines, but also inflation rebates seek to solve problems that just don't exist.

Some context: Part B remains a relatively small program, and drug spending represents an even smaller slice of the pie compared to other expenditures:

• Less than 5% of the $873 billion spent on all Medicare services in 2022 could be attributed to medicines administered under Part B.
• Looking at Part B specifically, 9% of Part B expenditures were attributed to medicine costs in 2022.
• 8 of the top 20 Part B medicines with the highest expenditures experienced a price decrease in recent years. Overall, price growth for Part B medicines was below the rate of medical inflation through 2017.

Politically driven policies are not helping patients. Part B medicines aren't driving cost increases and few patients are seeing out-of-pocket savings from the Part B inflation rebates. Rather, these rebates primarily serve the politicians looking for quick soundbites.