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IRA, Inflation Easing and Medicaid Regulations - Influence on the US Price Change Landscape

16 May 2024

In this sixth installment of an ongoing series on the key provisions of the Inflation Reduction Act of 2022 (IRA), here we assess WAC price changes from 2023 through April 2, 2024. This data assessment shows manufacturers reducing their price increases due to a) the provisions of the IRA and the possibility of future pricing penalties, b) reduced inflation rate as compared to earlier periods and even reducing WAC because of c) the impact on Medicaid rebates of the AMP CAP removal as well as d) limits on some patient out-of-pocket expenses.

As in the past, we examined the latest available top 50 Medicare Part D drugs from both a drug count (Top 50 Drugs) and a 2022 spend standpoint (Top 50 Spend). In our analysis, we 1) compared January 2023 price changes to First Quarter 2024 price changes to determine if manufacturers have adjusted their pricing behavior, and 2) estimated which products might incur an inflation penalty based on their price change history in the context of the IRA’s inflation penalty rebate.

From a trend perspective, the April 2024 price change data shows the majority of the Top 50 Drugs and Top 50 Spend decelerated or remained flat in their 2024 price change approaches. This is likely attributed to multiple factors including the easing of the Consumer Price Index’s inflation rate and the new IRA rules. Very few products took price changes in 2024 above their 2023 rate, and interestingly, 8 of the Top 50 Drugs took price decreases in 2024. From an IRA change from baseline perspective. We also estimate 10 of the top 50 Drugs (20%), representing 26% of the Top 50 Spend, have taken cumulative price increases that might take them over the rate allowed under IRA regulations.


Our analysis looked at the price changes of the Top 50 Medicare Part D Drugs (contributing ~50% of the total Medicare spending in 2022, the latest period publicly available). comparing 2023 WAC (Wholesale Acquisition Cost) changes to YTD 2024 WAC changes as of April 2, 2024. We examined how each of the top 50 products changed their WAC prices during this time and categorized the price change trend compared to the prior year. In other words, we examined how many products’ price increases decelerated, maintained a flat trajectory, or accelerated year-over-year vs. the prior year period.

Since Average Manufacturers’ Price is confidential, in order to estimate which products may be subject to inflation penalties under the IRA, we used WAC as the surrogate price. The analysis began with a calculation of the Benchmark Price based on the WAC in effect during the period between January 1, 2021, and September 30, 2021, as prescribed in the IRA. This Benchmark Price was compared to the Second Assessment period price defined by the IRA and includes 2023 price increases to determine if a product was likely to incur an inflation penalty.

2024 Price Change Trend Assessment

Table 1 below shows each trend category of price changes (decrease vs. decelerated vs. remained flat vs. accelerated) across the time periods. The two columns for each trend show the percentage of Top 50 Drugs and their contribution to the Top 50 Spend within each group of products.

Price change (’24 vs. ’23)
Trend% of
% of
2022 spend
Acceleration (increased % from ’23)6%4%
Flat (same % as ’23)28%40%
Deceleration (lower % from ’23)30%26%
No Change (no price increase)20%18%
WAC Decrease16%12%

Table 1: Comparing the price increase trend of Top 50 Medicare Drugs from 2023 to YTD 2024

So far in 2024, 66% of the Top 50 Drugs representing 56% of the Top 50 Spend price trends either decreased, no price change, or decelerated compared to 2023. Interestingly, in a trend not seen in other years, 8 products (16% of Top 50 Drugs) reduced their WAC prices, including insulins such as Lantus, Levemir, Novolog, Victoza; and COPD/Asthma products Advair, Symbicort. The WAC decreases were publicized in 2023 and were likely due to the Medicaid AMP Cap1 removal starting Jan 1, 2024, as well as OOP concerns, although pending price negotiations could also factor in.

The single largest category was flat – meaning they had the same increase in 2024 as they did in 2023 for the Top 50 Spend representing 40% of the spend and 28% of the Drugs. There were only 3 products (6%) of the Top 50 whose price increases accelerated in 2024 compared to 2023; these were Pomalyst (6% increase in 2023, 9% increase in 2024), Shingrix (6.9% increase in 2023, 7.9% increase in 2024) and Stelara (4% increase in 2023, 5% increase in 2024). All three drugs are facing loss of exclusivity in the 2024 / 2025 timeframe which seems like a factor that may be driving these actions.

Products Possibly Subject to Inflation Penalty

The factual components of the IRA and its inflation penalty calculation were known before manufacturers taking their 2024 price changes. From the IRA perspective, the key factors are the:

Benchmark Period price (Jan 1, 2021, through Sept 30, 2021);
Benchmark CPI-U (Jan 2021 – 261.582); and
Second Applicable Period CPI-U (Oct 2023 – 307.671)

Using these factors, we calculated that any cumulative increase >17.61% would trigger an inflation penalty. Table 2 below summarizes the cumulative increases of the Top 50 Medicare Part D Drugs from the benchmark period to their 2024 WACs to determine how 10 products might have crossed this threshold.

Cumulative price increase %
from benchmark
# of
% of
% of
Top 50 Spend
15 – 17.61%1530%33%
10 – 14.9% 510%11%
<= 9.9%1224%18%
Total 50100%100%

Table 2: Comparing the cumulative price increases from the benchmark period to the first assessment period, considering the 2024 price increases of the top 50 Medicare Part D products.

Table 2 clearly implies the limit set by the IRA methodology and lower inflation rates influenced price increases since the majority of products stayed below the threshold to incur an inflationary penalty. 80% of the Top 50 Drugs totalling 74% of the Top 50 Spend stayed below the threshold. Indeed, only 20% of the products representing 26% of the spend might have taken increase to surpass the inflationary limit imposed by the IRA. We say “might” since the difference between WAC and AMP based calculations may take some products that are close to the threshold either above or below it.

Furthermore, Table 3 below shows the 10 products that might exceed the IRA’s 17.61% inflation threshold. We compared these products’ annual price increase behaviors to determine if, and how, they modified their pricing actions.

(22 vs. 21)
(23 vs. 22)
(24 vs. 23)
Cum. Ch
Enbrel SureclickAmgen7.4%10%5%24.7%
Shingrix GSK5.9%6.9%7.9%22.2%
Invega SustennaJanssen5.4%8%3.9%18.6%
Jakafi Incyte9.8%7.1%2.8%17.8%
Imbruvica Abbvie/Janssen7.4%6.2%3.2%

Table 3: Comparing the annual January price increases of the products, that are likely to incur an inflationary price penalty.

The 10 products cumulatively had 2022 Part D spend of $31.0B, 26% of the Top 50 Spend. Out of the 10 products likely to incur an inflation penalty, there is a mix of pricing actions taken in 2024 and historically:

7 products (Imbruvica, Ibrance, Invega Sustenna, Enbrel Sureclick, Jakafi, Entresto, and Opsumit) decelerated their price increase in 2024 compared to 2023 likely due to lower inflation rates and pending IRA negotiations.
Ibrance, Invega Sustenna, Enbrel Sureclick, Entresto, and Opsumit had previously accelerated price changes from 2022 to 2023
Imbruvica and Jakafi continue to decelerate price changes in 2022 – 2024
Two products (Pomalyst and Shingrix) accelerated their price increases from 2023 to 2024 and exceeded the threshold likely due to LOE, interestingly they also accelerated price changes from 2022 to 2023.
One product (Eliquis) remained flat but also still exceeded the threshold.

Important caveat: Since AMP is proprietary and could very well be different than WAC, it is possible that some of the Top 50 Drugs may be under the 17.6% threshold to trigger an IRA inflation penalty. Our analysis of WAC above showed how close they are to the threshold. For instance, it appears Jakafi took their price increase history into account when deciding not to take a mid-year 2023 increase, as what their historical approach. Their 2024 price increase precision of 2.8% shows the IRA may have been at the forefront of their decision-making process. As shown in our fifth Blog, Table 3, Jakafi was right on the border of incurring an IRA price increase penalty and had taken two increases a year since 2020. There are several other products in a similar situation.

This analysis shows that drug manufacturers continue to monitor the impact of the IRA and incorporate inflation amounts into their price change behavior. The longer-term trend will be interesting to monitor. Please continue to follow our upcoming blog posts as we continue our assessment of the impact of the IRA.

Meanwhile, you can read the previous editions of our IRA blog series here:

Part 1 of the series was an overview of the IRA’s key provisions.
Part 2 assessed price increase levels pre/post-2020 election through the end of 2022.
Part 3 illustrated the impact that both the IRA and the period of post-pandemic higher inflation had on January 2023 price changes, It also talked about the top 50 products accelerating price increases, and how many products stopped short of triggering the inflation penalty.
Part 4 illustrated the impact of the IRA inflation penalty rebate on Part B drugs.
Part 5 examined 2023 mid-year price changes in the context of the IRA regulations and provide observations about the 10 initial products selected for “negotiation.”

* The AMP Cap removal was a provision in the American Rescue Plan Act of 2021, effective Jan 1, 2024, it removed the rebate cap on the Medicaid program that prevented state Medicaid programs from receiving rebate payments which exceed a product’s Average Manufacturers Price.




Jack M Mycka
Jack M Mycka
Matthew Skoronski
Matthew Skoronski

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