Key Takeaways 

• The Inflation Reduction Act (IRA) redesign increases plan and manufacturer responsibility in the catastrophic phase while capping beneficiary out-of-pocket costs, materially altering Part D economics.
• Medicare drug price negotiation adds new pricing variables. Negotiated Maximum Fair Prices (MFPs) introduce additional complexity for bid modeling and formulary strategy.
• Plans and manufacturers are reassessing contracting, risk management, and product launch approaches in response to structural program changes.

The IRA represents one of the most consequential overhauls of Medicare Part D since its inception. According to an August 2025 Avalere Health analysis, the law’s redesign provisions—combined with Medicare drug price negotiation—are significantly altering financial responsibility across beneficiaries, plans, and manufacturers. These changes are anticipated to be a key theme during the Pharmaceutical Care Management Association (PCMA) 2026 Business Forum.

Beginning in 2025 and continuing into 2026, the Part D benefit redesign eliminates the coverage gap phase and institutes a $2000 annual out-of-pocket cap for beneficiaries. At the same time, plan sponsors assume a larger share of liability in the catastrophic phase, while manufacturers are required to provide discounts in both the initial coverage and catastrophic phases. This redistribution of financial risk increases plan exposure to high-cost specialty drugs and heightens the importance of accurate bid modeling.

Negotiated Prices and Bid Modeling Complexity

Overlaying the benefit redesign is the implementation of Medicare drug price negotiation. The first set of negotiated MFPs will take effect in 2026, directly influencing plan costs for selected high-expenditure drugs. While lower gross prices may reduce overall spending in some scenarios, Avalere notes that the interaction between negotiated pricing, manufacturer discounts, and federal reinsurance contributions creates nuanced and sometimes counterintuitive financial effects for plans.

For Part D sponsors, this evolving structure complicates bid development and actuarial forecasting. Plans must account not only for shifting liability percentages but also for how negotiated products will influence formulary positioning, rebate dynamics, and competitive benchmark calculations. Manufacturers, in turn, must evaluate how negotiated pricing affects contracting leverage, lifecycle management, and launch sequencing for future therapies.

Implications for Contracting and Formulary Strategy

The IRA’s financial rewiring is expected to influence formulary design decisions and contracting strategy. Increased plan liability in catastrophic coverage may drive greater scrutiny of high-cost specialty products, potentially accelerating utilization management efforts or reshaping tier placement decisions.

Manufacturers may face a more constrained pricing environment, particularly as negotiated products set new reference points within therapeutic classes. The evolving economic framework may also intensify interest in alternative contracting models that better align financial risk with real-world outcomes.

A Central Industry Focus in 2026

Given the magnitude of these changes, IRA implementation is likely to be a prominent topic of discussion at the PCMA Business Forum. With senior leaders from pharmacy benefit managers, payers, and pharmaceutical manufacturers convening to address pharmacy benefit innovation and affordability, conversations will likely center on how Part D redesign and price negotiation are reshaping market dynamics for 2026 and beyond.

As the IRA moves from statutory reform to operational reality, stakeholders must navigate a more complex and financially redistributed Medicare landscape. Strategic agility in bid modeling, formulary management, and contracting will be critical to sustaining both access and program stability in this new era of Part D.

Reference

Getachew B, Stengel K, Donthi S. The new stakeholder economics of Part D after the IRA. Avalere Health. Published August 29, 2025. Accessed March 11, 2026. https://advisory.avalerehealth.com/insights/the-new-stakeholder-economics-of-part-d-after-the-ira