Image Credit: Nicholas Saraceno
The afternoon of day 2 at Asembia’s AXS25 Summit offered various intriguing sessions to pick from, including one on “Navigating the IRA: What Have We Learned? What is on the Horizon?”
The IRA—or Inflation Reduction Act—is a federal law passed in 2022 that, among its various purposes, aims to lower prescription drug prices. However, behind the scenes, it accelerated a variety considerations and implications for life sciences manufacturers, including not only for meds chosen for Medicare price negotiations, but with indirect effects that span manufacturer portfolios pertaining to pipeline and marketed drugs.
Having said that, this seminar—featuring Brian Corvino, practice leader of Deloitte’s life sciences value and access practice, and Blasine Penkowski, a former chief strategic customer officer with Johnson & Johnson—shared learnings and observations regarding the initial rounds of direct price negotiations, along with what stakeholders can come to expect in the future.
Essentially, the observations and learnings from the first two initial price applicability year (IPAY) rounds can be broken down into five steps:
- Diagnose (portfolio impact assessment)
- Deploy (organizational readiness)
- Develop (information collection request or ICR, and manufacturing dossier)
- Defend (value of drug throughout the negotiation process)
- Deliver (ensure compliant effectuation and execution)
Diagnose
When it comes to preparing one’s drug for presentation to CMS, it’s important that the medication itself first meets the definition of a single-source drug. Once that hurdle is achieved, it should meet the time since approval of first indication and meet the minimum spend; it should not be a bona fide marketed multisource, a single disease orphan drug; or a plasma-derived drug.
Eligibility is also dependent on it not having been previously selected or not approved as a small biotech drug. It should also meet top 50 spend.
Deploy
When it comes to preparing for deployment, Corvino noted that this adventure is a multi-year journey.
“For those that have not embarked on the journey, or those that are in the process of working on the journey, this is a three, four, five-year journey,” he explained. “This is not a journey that is a quick 18-month type of thing, so once manufacturers are selected, you have an obligation through effectuation for a fairly substantial amount of time after that, even if there is a bona fide generic competition, post the effectuation date. Also, a really critical lesson learned for us is that the best practice is to ensure readiness for your submission on Jan. 1, which is a full month ahead of your selection.”
It’s necessary for manufacturers to prepare at risk, he says, because the hardest situation is to be able to develop the entirety of the submission package in a 30-day period. It requires many manufacturers to be able to do that diagnostic and deploy resources several months in advance, or in some instances, several years ahead of time.
Being able to educate one’s organization on what the necessary obligations are to ensure readiness is also critical. This ranges from market access teams, to corporate affairs, all the way to the CFO.
Develop
The development of a manufacturer data submission is mandatory and can be divided into multiple sections, including:
- Selected drug information
- Non-FAMP data collection
- R&D costs and replacement
- Current unit costs of production and distribution
- Prior federal financial support
- Patients, exclusivities, and approvals
- Market data and revenue and sales volume data
It’s imperative that enough time and resourcing is accounted for—at least nine months. Clear governance and accountability, along with strong cross-functional program management, are also key.
Defend
When it comes to defending the value of the drug throughout the entire negotiation process, it’s recommended that the approach be aligned to IRA methodology. In other words, one should focus on therapeutic alternative and comparative clinical value.
This would involve creating teams that can communicate the drug’s clinical value and supporting evidence; for additional preparedness, manufacturers should be ready to be asked technical questions and should conduct multiple simulations to be ready.
Deliver
From a broad perspective, ensuring complaint effectuation and education is powered by medication access for the proper price.
“For 100% of the people in this room, one of the most critical things in this moment is what we’ll call effectuation. I didn’t know what effectuation was before IRA, but I think it is the people at this conference and in this room that will be responsible for ensuring that this program gets off the ground and plugging holes where those natural holes are,” Corvino said. “… Effectuation involves being able to do something operationally that has never been done before within a pharmacy.”
For example, regarding a retail pharmacy, say there are two patients, with Patient A being a Medicare patient, and Patient B being a commercial patient. How does that Medicare patient at the point of sale get the intended price, and how do the payments operate within that ecosystem?
Also, for dispensing entities, there’s “a set of plumbing” and a set of operations between the manufacturer and the end dispenser. Those pipes don’t exist. Being able to build out those pipes and processes—not only in terms of data flows, but in terms of financial flows—is a Herculean effort. Currently, IPAY 2026 manufacturers are actively navigating the complexities of preparing for maximum fair price (MFP) effectuation on Jan. 1, 2026, while IPAY 2027 manufacturers and beyond are initiating planning, while observing any lessons learned.
Overall, the main stakeholders along the access continuum should be the payers (such as Medicare plan sponsors and commercial PBMs); providers (private or independent practices; IDNs or health systems; hospitals and academic medical centers; 340B entities); and pharmacies(retail; specialty; and in-office dispensing).
Reference
Corvino B, Penkowski B. Navigating the IRA: What Have We Learned? What is on the Horizon? April 29, 2025. Asembia AXS25 Summit. Las Vegas.