Historic statute introduces mandatory Medicare price negotiations, Medicare Part B and D inflation rebates, and Medicare Part D benefit redesign.

H.R. 5376, the Inflation Reduction Act of 2022 (the Act), marks Congress’s most significant impact on the pharmaceutical industry since the Affordable Care Act in 2010. In a departure from long-standing policy, the Act imposes a requirement on manufacturers to negotiate drug prices with Medicare, beginning in 2026. The other drug pricing measures of the Act — Medicare Part B and D inflation rebates, and a new Medicare Part D discount requirement — will have an even more immediate effect on pharmaceutical manufacturers when they become effective as early as 2023, as discussed below.