Inflation Reduction Act
Scenario: The Inflation Reduction Act (IRA) would be significantly altered, with much legislation and unspent funds being repealed, particularly those relating to climate initiatives.
Repealing or making any significant alteration of the Inflation Reduction Act (IRA), including the clawback of unspent funds, would reshape preventative care initiatives and long-term planning across the U.S. healthcare market. Among payers, there is broad consensus that these changes will have an impact, though the degree of influence varies:
Question: How would a significantly altered or repealed IRA impact your preventative care initiatives and long-term planning?
A rollback of the IRA is expected to disrupt preventative care initiatives and long-term planning, with most anticipating at least some level of impact; there is, however, uncertainty about how deeply these changes will reshape funding and priorities.
Clawing back unspent IRA funds introduces systemic effects, particularly in how CMS and federal reimbursement frameworks could evolve. While many stakeholders may overlook the granular details, the restructuring of federal policies may necessitate redefining payer strategies, with implications for the funding and prioritization of preventative care.
Takeaway: While the direct impact on individual payers varies, the structural knock-on effects of any altered IRA would cascade across the healthcare ecosystem. Payers will need to anticipate shifts in reimbursement models and adjust long-term plans accordingly, balancing their priorities in an environment of reduced federal backing.
Staying ahead of potential preventative care investments and budget allocations can provide insight into moving market value.
Medicare
Scenario: There are federal cuts to provider payments with an expansion of Medicare Advantage.
Federal cuts to provider payments, coupled with an expansion of Medicare Advantage, have the prospect of reshaping provider networks and financial planning for U.S. payers over the next three years. There is a strong agreement among payers that these shifts would bring significant challenges.
Question: What level of impact would Medicare reimbursement reforms have on provider networks/financial planning in the next three years?
A majority anticipate either a major or moderate impact, whilst a small fraction see an even greater level of disruption. The overall sentiment suggests these changes would reshape the cost structures and network strategies.
The potential effects extend far beyond reimbursement cuts, as rising out-of-pocket costs for Medicare Advantage Part D drugs put additional pressure on affiliated provider networks and reshape patient utilization patterns.
In response, payers may strategically consolidate plans, phasing out older, less viable options and introducing higher-cost alternatives, which is a trend that could accelerate. This, however, could reduce patient choice and exacerbate affordability concerns for Medicare Advantage enrollees.
“Any changes to Medicare especially through increase of advantage programs, will have a large impact on health care delivery and profitability.”
Regional Director of Pharmacy,
Payer-integrated IDN
Takeaway: To mitigate pressures, payers and providers can prioritize investments in value-based care and efficiency-driven models to optimize outcomes under constrained financial conditions.
Securing data-driven insights into the market can ensure campaigns resonate with shifting payer focus.
FDA & CDC Reform
Scenario: Agencies like the FDA and the CDC would have sweeping regulatory reforms, and some agencies would be closed down.
Sweeping regulatory reforms to agencies like the FDA and CDC, including potential closures, would profoundly impact the adoption of healthcare innovations. Among payers, perspectives on the implications of these changes vary, reflecting a mix of opportunities and risks
Question: How much impact would reformed health agencies have on your ability to adopt healthcare innovations?
Reforms to health agencies present a mixed outlook for healthcare innovation adoption. While a third of respondents expect no change, others are divided between moderate positive and negative impacts, suggesting uncertainty around whether reduced oversight will accelerate or hinder innovation.
Existing distrust, which is heightened by perceptions of political influence in COVID-era decisions, raises concerns about whether reforms can effectively balance streamlined processes with robust oversight. While reduced regulatory authority could cut approval timelines and ease compliance, conversely, it may also slow innovation due to inadequate staffing and unclear guidance.
Agency closures further compound the challenge, potentially disrupting oversight for specialized innovations requiring clear pathways. However, for payers with the resources to adapt quickly, reduced oversight may offer agility and cost savings.
Takeaway: The success of these reforms hinges on balancing efficiency with oversight and rebuilding trust in regulatory bodies. Reduced regulatory burdens could accelerate innovation, but insufficient staffing and inconsistent guidance pose risks to clarity and adoption. For payers, the ability to monitor and adapt to these changes presents a strategic opportunity to leverage streamlined processes while mitigating risks of uncertainty and disruption.
Understanding how payers may adapt to reduced oversight and new approval timelines is crucial for anticipating their innovation strategies and identifying opportunities to support market access and regulatory navigation.
Drug Importation
Scenario: Prescription drugs would be imported from other countries in a bid to lower drug costs.
The potential to import prescription drugs from other countries to reduce drug costs would mark a contentious policy shift. There is broad recognition of its potential to affect drug pricing and formulary management between Payers, with most expecting a positive impact.
Question: What impact would imported drugs have on your drug pricing and formulation management strategies?
The majority of payers anticipate positive impacts on drug pricing and formulation management strategies relating to costs. However, a small segment does not, likely due to concerns over tariffs, quality control, and potential disruptions to existing supply chains.
Whilst the policy offers the promise of cost savings, practical challenges may limit its effectiveness. Tariffs and distribution inefficiencies could erode expected savings, and quality control concerns, particularly for imports from countries like China and India, may undermine trust.
Medicare patients and other consumers might perceive imported generics as inferior, complicating adoption and acceptance. With this, American manufacturers face potential disruptions to contracts and profitability, especially if index pricing policies are enacted. This could delay U.S. drug launches, destabilize the global supply chain, and create friction in international collaborations. Additionally, the administration’s focus on reducing active pharmaceutical ingredient (API) imports from China could inadvertently increase healthcare costs, offsetting any savings from drug importation.
"The new administration will focus on reducing API imports from China, likely through tariffs, which will increase healthcare costs in the US. It could also impact imports from European countries, affecting companies like Novartis, GSK, Roche, J&J and other companies."
David Byram
Senior Partner, Eversana
Takeaway: Payers should remain strategically flexible, adapting pricing strategies and contracts to navigate cost fluctuations and supply chain uncertainties. Those who proactively align with manufacturers and adjust to policy shifts will be better positioned to balance risks and leverage opportunities in an increasingly competitive drug market.
Understanding how these challenges impact payer pricing strategies and identifying solutions to reduce risk and build trust will be key.
Explore more payer-related political impact trends in this three-part series:
- Part 1: Inflation Reduction Act, Medicare, FDA and CDC reform, and Drug Importation
- Part 3: Health Savings Accounts, Rural Health, Veteran Care, and Conclusions
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