As a practicing pharmacist and business person, you wear at least two hats: one focused on patient care, the other on the survival and success of your pharmacy. The Inflation Reduction Act (IRA), signed into law in 2022, brings changes that could impact both fronts—dramatically. The centerpiece of the IRA's pharmacy-related provisions is the Medicare Drug Price Negotiation Program (MDPNP), also known as the Medicare Fair Pricing (MFP) initiative.
In this first report, we’ll discuss the program and its mechanics. Then in part 2 we’ll deep dive the financials around each drug (teaser, they’re not all created equal). And finally in part 3 we’ll break down the strategy that will set your pharmacy up for success through the transition process.
What Is the Medicare Fair Pricing Program?
Beginning in 2026, Medicare will begin paying a newly negotiated price for it’s top-spend Part D drugs, called the MFP. This marks a seismic policy shift: Medicare, which historically paid market prices through pharmacy benefit managers (PBMs), will now exert strong influence over the cost of select medications. The negotiated prices will benefit Medicare beneficiaries, but the reimbursement framework has a ripple effect across the pharmacy supply chain.
Key Milestones and Timeline
In future years, the list of drugs will expand: 15 additional drugs in 2027, another 15 in 2028 (including Part B), and 20 more each year starting in 2029.
Drugs in 2027
Who’s Affected?
While Medicare patients benefit from lower out-of-pocket costs, pharmacy owners must reckon with an altered reimbursement pipeline. Here’s what’s changing:
This disconnect is new, and potentially harmful if not tracked and managed meticulously. Cash flow doesn’t come easy with already shrinking margins, and this could be one more strike at it.
The Stakes for Pharmacy Owners
Now is the time to dig into the specifics of the MFP drug list and prepare strategically for what’s next. Our Index data shows similar numbers as what you may have read from some other resources:
This indicates that across the Outcomes network, the average pharmacy can expect around $22,000 of dispensing reimbursement each month to be coming from a manufacturer each month- rather than a PBM.
Your bookkeeping and contract compliance tracking, as well as your inventory and medication synchronization strategies will all need to be looked at in order to be successful when this new program rolls out. But take heart, because the right answer will never be to stop taking care of your patients; and Outcomes is here to help! In Part 2, we’ll use the Index data to share drug-by-drug recommendations. Stay tuned!