24 September 2025 • 3 minute read
State analyses: Medicare drug plan premiums and availability under the Inflation Reduction Act
The Inflation Reduction Act (IRA) made significant changes to the Medicare drug programs.[1] Although the IRA may have been intended to make medicines more affordable for beneficiaries and the federal government, DLA Piper has observed more restrictive formularies, higher drug plan premiums, and fewer drug plan options as the law has been implemented.[2] In state fact sheets below, we build on our prior analyses and examine these trends over time.
While the IRA was signed into law in 2022, key healthcare provisions are taking effect in 2025 (out-of-pocket cap, benefit redesign) and 2026 (first year of MDNP negotiated prices). The resulting market dynamics from these changes could increase the cost of drug coverage (premium price) or result in fewer plan options available. In fact, the Biden-Harris Administration announced a voluntary demonstration program in 2025 to manage premium growth in standalone Medicare prescription drug plans (PDPs).[3]
Since the inception of the Medicare Part D program, Medicare Advantage Prescription Drug plans (MA-PDs) – which tend to have lower drug costs and incur fewer losses relative to PDPs – have been steadily growing in membership, while PDP plans have been declining.[4] As the IRA is implemented, more PDPs may exit the market, leaving fewer options for patients.[5]
In this analysis, we evaluate access to Medicare Drug Plans and premiums in 2024 and 2025 compared to 2021. We find that while Part D plan premium growth has been modest on average, there are sizeable differences in premiums and their growth between plan types (MA-PD and PDP) and in different areas of the country.
As the IRA has the potential to further affect premiums and plans’ futures in the market, policymakers are encouraged to closely monitor these trends to determine if corrective action may be warranted.
Our analysis
All information in the analysis is taken from the publicly available Centers for Medicare and Medicaid Services (CMS) plan files and Census Bureau data. Our analysis is not weighted by enrollment, so it may differ from others that use that methodology. Companion analyses examine formulary access and co-pay.
We identified Part D plans as PDPs or MA-PDs and removed the following: plans that were in US territories, special needs plans, non-initial coverage plans, and plans that did not specify 30 days’ supply of the analyzed drugs and excluded those that were marked as “Sanctioned.”[6] We created county groups based on income (Census Bureau) and community type (USDA rural-urban continuum codes).
To see a state’s analysis, select its fact sheet below.
[1] The IRA directs the government to set prices for a select and growing set of medicines through the Medicare Drug Price Negotiation Program (MDNP) each year beginning in 2026. The IRA also established a new structure in the Medicare drug benefit (Part D) that will increase the amount of costs paid by insurers for higher-need patients, a penalty on manufacturers for drug price increases over the inflation rate, and a $2,000 cap on out-of-pocket expenses for covered Part D drugs. Part D drugs are typically picked up in a pharmacy and are self-administered (like pills, creams, or self-injections).
[2] https://jamanetwork.com/journals/jama-health-forum/fullarticle/2814988.
[3] CMS announcement https://www.cms.gov/newsroom/fact-sheets/cms-releases-2025-medicare-part-d-bid-information-and-announces-premium-stabilization-demonstration and CBO analysis https://www.cbo.gov/publication/60804.
[4] https://www.medpac.gov/wp-content/uploads/2023/10/Structural-issues-in-Part-D_Nov24_SEC.pdf.
[5] Avalere: https://avalere.com/insights/how-may-the-ira-shift-part-d-market-dynamics.
[6] https://www.cms.gov/medicare/coverage/prescription-drug-coverage.
