Global Healthy Living Foundation Peer-Reviewed Research Shows Hidden Risks of the Inflation Reduction Act's Drug Pricing Reform
they can shift the drug to a higher price tier where patients will pay more out-of-pocket
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'The IRA's 'maximum fair price' (MFP) policy was designed to reduce out-of-pocket costs for Medicare patients. However, it may lead to the opposite: higher out-of-pocket costs and increased health risks for vulnerable patients,' report author Dr. Popovian says
'By suppressing the retail price, CMS is reducing the profit margins and revenue for pharmacy benefit managers (PBMs), which is good. Predictably, the PBMs will not stand pat—they can shift the drug to a higher formulary tier, where patients will pay more out-of-pocket to acquire the medicine so the PBM can protect its profit margin,' said Dr. Popovian in a recent episode of GHLF's Healthcare Matters podcast.
The study specifically modeled outcomes for two widely used blood thinners, Eliquis and Xarelto. If PBMs reclassify these drugs to higher cost tiers to compensate for lost profit, patients could face an estimated $688 million more in out-of-pocket costs. This cost-shift could result in over 320,000 patients abandoning treatment, potentially leading to 145,000 major cardiovascular events and up to 97,000 deaths.
'This research underscores a serious gap in how drug pricing reforms are being implemented and monitored,' said Dr. Popovian. 'Without proper oversight and transparency, policies that were meant to help patients could end up hurting them.'
The GHLF education campaign includes:
'This campaign is not about politics—it's about patients,' said Seth Ginsberg, GHLF Co-Founder and President. 'We want people to understand what's at stake when reforms don't account for the full complexity of our health care system.'
GHLF encourages policymakers, journalists, and patient advocates to explore these resources and consider how reforms like the IRA impact access to critical medications.
About GHLF
The Global Healthy Living Foundation is a U.S. based, 501(c)(3) nonprofit, international organization whose mission is to improve the quality of life for people with chronic illnesses by advocating for improved access to health care through education, patient-centered clinical research, support, advocacy, and economic and policy research. GHLF is also a staunch advocate for vaccines. The Global Healthy Living Foundation is the parent organization of CreakyJoints®, the international, digital community for millions of people living with arthritis and their supporters worldwide who seek education, support, activism, and patient-centered research in English, Spanish, and French. In addition to arthritis and autoimmune disorders, GHLF supports dermatology, gastroenterology, neurology, cardiology, oncology, infectious disease, rare disease, and pulmonary patients through a host of different programs and activities which draw more than 700,000 patients a month to GHLF websites and create more than 10 million impressions a month on seven social media platforms. In 2024, GHLF had more than 1 million views and listens with its patient-centered audio-visual content, found on YouTube and podcast platforms. GHLF never asks the public for donations, receiving funding instead through governments, non-governmental organizations, foundations, industry, family foundations, and GHLF Co-Founder Louis Tharp. Visit www.ghlf.org for more information.
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Amazing studies show that the introduction of Medicare led to massive reductions in the financial uncertainty facing elderly Americans with their medical spending. Has it been good for doctors? Unambiguously. It has been a huge boon to their business. One thing we know from every health economic study is, if you lower prices, more people use more medical care. Medicare did that. They lowered prices and people use more medical care. It's been a huge boon to the medical industry. I think the big question going forward is how to set the rates and in a way that balances our fiscal needs against the needs to have qualified physicians participate in Medicare. Quite frankly, it seems like the direction of that is clear: Medicare overpays subspecialists and underpays primary care doctors. And that's because the panel that set Medicare rates has been politically captured by the subspecialists. I find it hard to believe that if orthopedists made $700,000 instead of $1 million per year, they'd quit Medicare. But it is plausible that a primary care physician making $150,000 or $250,000 might actually quit Medicare. These are people who could go into other lucrative professions. I want to second Claudia's call for more data. We need to really understand how physicians will respond to reimbursements, and we need to set reimbursements in a way which balances these two needs. Ornstein: Let me add one thing. Just do a thought experiment. What if we'd never had Medicare? What if we didn't have any program with government support for a population of older Americans? The number of people who would've died prematurely, the number who would've used up every portion of their assets trying to cover just basic medical care, would've been enormously high. Society would've been so much poorer overall if there had been no Medicare. And if we see assaults on these programs, we're going to go back to having bankruptcies and people who won't get the care because they can't afford it. Brull: Dr Fegan, as a physician, what are your thoughts? Fegan: I think Medicare has made a tremendous difference. And if you just want to look at the data on life expectancy for Americans compared to other wealthy nations: If you look at the top 17 wealthiest countries in the world, we are really near the bottom up until age 65. And the dramatic change that occurs after 65 in terms of life expectancy in the United States, compared to other wealthy nations, is that we shoot to the top. And this is because Medicare has provided access to care for people who didn't have access to care. For physicians, and it really depends on the population of physicians you're talking about, it guaranteed that they were going to be compensated for patients that they may have been taking care of without appropriate compensation. The majority of hospitals in this country would not survive without Medicare. The majority of patients in hospitals in the United States are Medicare recipients. I would say that prior to the Affordable Care Act, 80% of our outpatients were unfunded and 56% of our inpatients were unfunded. Now we bounce between 60% and 65% of all our patients being funded, which made a tremendous difference for us. Medicare has made being a primary care physician feasible, whereas previously it was a financially precarious situation for many of them, in terms of being compensated for the services that they were providing. They might provide services for a chicken or for a free meal, as opposed to knowing that they would be paid at the end of the day, and they would know the rate they were going be paid. The challenge with Medicare is that it pays different rates within the city. I live in Chicago, and if you have an office downtown, the rate you receive is different from if you're on the South Side or West Side. We have to look at how we make those kinds of decisions. What We Pay Our Doctors Brull: Dr Ornstein, legislation in 1993 set targets for spending growth in physician services but did not account for inflation in practice costs. Why can't Congress seem to take care of the so-called doc fix? Ornstein: I think there are two reasons. One is obviously money. It means a lot more money, and they have been at least cognizant of the problems with the solvency of the program, looking at the long run. The second is that doctors have really not been a very effective lobby. To circle back to Medicare Advantage, I'd say the prime reason reimbursement rates are 130% or whatever, when they were supposed to be 90%, is because of the effectiveness of the insurance lobby with Congress. Congress could have stepped in and done something about that. If you look even, for example, at the Affordable Care Act, it was actually then-Senator Al Franken [D-Minn.] who said, 'If you're providing coverage under the Affordable Care Act, 85% of the money that you take in has to go back to patients.' There are ways for Congress to deal with this, but they respond to the lobbying that they get and the effectiveness that they've seen. And frankly, physicians have not been very effective. The physician community was extremely effective in keeping Medicare from being enacted for decades when the [American Medical Association] was an extraordinarily powerful lobby, until the Great Society and these enormous numbers of Democrats coming into Congress in 1964 enabled it to happen. But, if we're looking at weakness in lobbying efforts, physicians are in the top 10. More Pay Cuts Brull: Another one for you, Dr Ornstein. The recently passed budget reconciliation bill includes cuts in government spending. The Congressional Budget Office projected that this will include about $500 billion in mandatory reductions in Medicare spending between 2026 and 2034, or about a 4% reduction in payments to hospitals and physicians. Congress could act to block the cuts. Do you project that they will do so? And if they do not, what may be the effect on physicians and the program over the next decade? Ornstein: It's kind of interesting. We've had these so-called pay-go rules — pay-as-you-go — in one form or another since 1990 and the budget agreement that then-President George Herbert Walker Bush enacted with Congress, which was highly controversial because it violated the 'Read my lips: no new taxes" pledge. It has worked reasonably effectively, at least at different times. But in the past, when we have seen pay-go implemented, Medicare is one of the prime elements that gets these cutbacks or sequesters. Whenever it's happened, Congress has then stepped in and ameliorated it because they saw that it was going to have a bad effect. I'm not 100% sure it's going to happen this time. And the fundamental reason is that we know Republicans, certainly going back at least to the Newt Gingrich era in the House, have wanted to take over the Medicare program. Medicare as we know it would not exist if they had had their way. It would be in some other form. The sequesters don't allow cuts in Medicaid, but they have these big cuts in Medicare, and I think it's a dicey proposition. But let's just note, Jen, that if we do see these cuts, they will hit the reimbursement rates for hospitals and for physicians. Just start with hospitals for a minute, where we know the Medicaid cuts are going to have a devastating effect, especially on rural hospitals that have already been reeling even without these cuts. What we know is that if any hospital closes, it puts enormous pressure on other hospitals, and the other hospitals are not going to get the money. They're going to cut back on services. We've seen in Atlanta, for example, where an urban hospital had to close, and every other hospital found that their emergency room services were suddenly just completely overloaded. This system looks like it's separate parts private care, Medicare, Medicaid, but they're all interrelated, and it's like a set of dominoes. If one begins to fall, the others are affected by it. These cuts would be catastrophic if they are allowed to take place, and whether enough Republicans will join with Democrats to ameliorate that, which of course then means bigger deficits, we don't know for sure.
