Medicare Part D Formularies Remain Broad for IRA-Negotiated Drugs

Key Takeaways

• More than 95% of Medicare Part D formularies covered 22 of 25 drugs selected for Medicare Drug Price Negotiation (MDNP) in 2025.
• Coverage for 129 branded drugs in the same therapeutic classes was substantially lower and declined between 2021 and 2025.
• Half of the drugs with the steepest formulary losses treated rare diseases and carried US Food and Drug Administration (FDA) orphan drug designations.

The Inflation Reduction Act (IRA) continues to reshape Medicare drug coverage, raising questions about formulary restrictiveness and patient access as price negotiations begin.

An assessment by DLA Piper using Centers for Medicare & Medicaid Services (CMS) data evaluated how Medicare Part D formularies have changed for drugs selected for Medicare Drug Price Negotiation and for comparable therapies not selected.

DLA Piper analyzed formulary coverage for 25 drugs selected for the Medicare Drug Price Negotiation Program—10 for 2026 and 15 for 2027—alongside 129 branded drugs in the same therapeutic classes. On an enrollment-weighted basis, at least 95% of Medicare formularies covered 22 of the 25 selected drugs in 2025.

Between 2021 and 2025, formulary coverage stayed the same or increased for 22 of the selected drugs, while 3 experienced a decline in 2025. In contrast, coverage for therapeutic alternatives not selected for negotiation was consistently lower at every time point analyzed. On average, only 56% of formularies covered these nonselected drugs in 2025, representing a 3% decline from 2021.

The analysis also identified 20 drugs with a 5% or greater drop in formulary coverage between 2024 and 2025. Only one of these was selected for MDNP. Notably, 10 of the 20 drugs treat serious, rare diseases and were approved by the FDA with orphan drug designation.

Differences emerged by plan type. For these 20 drugs, formulary coverage was higher in integrated Medicare Advantage prescription drug plans (MA-PDs) than in standalone Part D prescription drug plans (PDPs). On average, MA-PDs offered 19% greater coverage, and for orphan drugs specifically, the gap rose to 21%.

Clinical Implications

Formulary placement directly affects beneficiary out-of-pocket costs and access to therapy. Drugs included on a plan’s formulary typically count toward the $2000 annual out-of-pocket maximum under Medicare Part D. When drugs are excluded, beneficiaries may face full drug costs, be forced to switch therapies, rely on patient assistance programs, or forgo treatment altogether.

The IRA requires negotiated drugs to be covered on Part D formularies once negotiated prices take effect, unless a bona fide generic or biosimilar competitor enters the market. Because most selected drugs were already broadly covered, the immediate access gains from negotiation may be limited.

However, declining coverage among nonselected drugs—particularly those treating rare or pediatric diseases—raises concerns about unintended consequences. Competitive pressure to keep premiums low may incentivize plans to narrow formularies, potentially shifting costs and clinical risk to patients. These trends warrant closer evaluation as the IRA is implemented nationwide.

According to the DLA Piper assessment, “there may be valid clinical reasons for restricting coverage,” but the firm cautioned that “this decline in formulary coverage, which may be the result of cost constraints on the plans, likely merits further evaluation.” The authors emphasized that access challenges may be more pronounced in standalone PDPs compared with MA-PDs, which are less available in rural areas.

Conclusion

Overall, Medicare Part D formularies continue to provide broad coverage for IRA-selected drugs, while access to non-selected therapies—especially orphan drugs—has narrowed. As Medicare drug price negotiation expands, policymakers and CMS may need to closely monitor formularies to ensure beneficiary access is preserved across therapeutic areas.

Reference

Axelsen K, Lynch K, Martin M, Jeppson H. Keeping watch on Medicare: formulary assessment shows large declines in access for certain rare disease treatments. DLA Piper. July 30, 2025. Accessed January 20, 2026. https://www.dlapiper.com/en/insights/publications/2025/07/keeping-watch-on-medicare-formulary-assessment-shows-large-declines-in-access