Inflation Reduction Act Changes To Part D Plan Design: Lower Premiums, Higher Deductibles, And Some Smaller Formularies

The Inflation Reduction Act (IRA) of 2022 changed the financing and risk-bearing obligations of Medicare Part D prescription drug plans in 2025. We used the Medicare 2021-25 public use files to construct a counterfactual trend using 2021-24 data to predict 2025 outcomes if the IRA had not implemented substantial benefit changes. We compared actual deductibles, premiums, and utilization management outcomes in 2025 against outcomes predicted by prior trends for both Medicare Advantage prescription drug (MA-PD) plans and Medicare Part D standalone prescription drug plans (PDPs). We found substantial differences between the predicted inflation-adjusted and population-weighted trend and actual deductibles for MA-PD plans (actual mean, $305.42; predicted mean, $187.54) and for PDPs (actual mean, $490.56 per month; predicted mean, $401.42 per month), as well as a decrease in premiums for MA-PD plans (actual mean, $12.76 per month; predicted mean, $15.02 per month) and for PDPs (actual mean, $39.55 per month; predicted mean, $64.07 per month). No changes were observed for prior authorization or step therapy. Formularies became smaller for protected classes and low-tier drugs in 2025 for PDPs relative to prior trend. No changes in the size of the preferred retail pharmacy networks were observed relative to prior trend.