Boston — A new data tool developed by the Pioneer Institute is raising concerns that federal drug price controls aimed at lowering out-of-pocket costs for seniors are instead driving up expenses for many Medicare beneficiaries.
The IRA Medicare Drug Access Tracker, created by Dr. William Smith and Dr. Robert Popovian, analyzes the early effects of drug pricing reforms introduced under the federal Inflation Reduction Act (IRA). Its first report found that out of nine commonly prescribed medications selected for price setting under the IRA—used to treat conditions such as heart failure, diabetes, and blood clotting—seven showed increases in out-of-pocket costs for patients. Insulin was excluded from the analysis due to separate statutory pricing regulations under the same law.
Dr. Smith, Senior Fellow at the Pioneer Institute, criticized the approach, arguing that the law ignores the complexities of the pharmaceutical rebate system. “The price controls show that Congress fundamentally doesn’t understand the rebate system that underpins the pharmaceutical market,” he said. “All the politicians who argued that the IRA law would make drugs more affordable should look at this new data.”
The current pricing model involves drug manufacturers paying large rebates to pharmacy benefit managers (PBMs) such as Caremark and Optum. These rebates typically reduce overall costs but are not visible to patients. When the Centers for Medicare and Medicaid Services (CMS) intervenes to lower a drug’s official list price—such as with the anti-coagulant Eliquis, which dropped from $521 to $231—these rebates often vanish. As a result, PBMs may respond by increasing patient cost-sharing through higher co-pays and co-insurance, effectively shifting the burden directly onto consumers.
The Tracker focuses on Medicare patients covered by the nation’s four largest PBMs, which together control 87 percent of the market. In addition to monitoring out-of-pocket costs, the tool also tracks administrative barriers imposed by PBMs, including prior authorization requirements and quantity limits. These practices, known as demand management strategies, can strain healthcare providers and delay access to treatment.
Among the report’s findings, average out-of-pocket costs for the nine drugs studied rose by 32 percent—from $74.51 to $98.42. Seven of the drugs saw individual increases ranging from $10.56 to as much as $316.81. One of the two drugs that did not show a cost increase had newly launched biosimilar competition in 2025, which likely affected pricing.
Dr. Popovian warned that higher patient costs may not be the only unintended consequence of the IRA’s pricing provisions. “The IRA also creates less incentive for pharmaceutical innovation and increases the possibility that some popular drugs may be excluded from health insurance formularies,” he said.
This report marks the first release from the IRA Medicare Drug Access Tracker. The Pioneer Institute plans to publish additional data throughout the year as more drugs are impacted by federal price-setting policies. The tool is available to the public at pioneerinstitute.org/rxpricewatch.
