Pfizer Pflash: A Spotlight on IRA Part D Redesign and its Impact in 2025 Presentation

Published: 2025-03-28 11:21:14 ET PFE

• $2,000 annual out-of-pocket cap and new Prescription Payment Plan

• Sunsetting of the Coverage Gap Discount Program and addition of new manufacturer discounts in the initial and catastrophic coverage phases

Total Expected Net Impact of IRA Part D Redesign

1. Calculation performed on FY-2024 Revenues of $62.4 billion, which corresponds to $63.6 billion in FY-24 Revenue (actual) while excluding $1.2 billion in non-recurring 2024 Paxlovid revenues.

2. 2025 impact estimate based on third party actuarial analysis, leveraging historical patient drug utilization data.

Impact is Expected to Vary Based on Drug Cost as Well as Portion of Medicare Scripts

Deductible Phase

Beneficiary Plan Manufacturer Government

• Deductible Phase: Beneficiaries pay 100% of costs

• Initial Coverage Limit (ICL) Phase: Beneficiaries pay 25% of costs, plans pay 75% up to an ICL

Initial Coverage Phase Coverage Gap1

Catastrophic Phase

25% Member Coinsurance

20% Plan Liability

• Coverage Gap Phase: Non-low-income beneficiaries pay 25% of drug costs, manufacturers pay 70% of ingredient costs for applicable drugs. Low-Income Subsidy (LIS) beneficiaries not included in the base for the calculation of the Coverage Gap Discount

• Catastrophic Phase: The federal government pays 80% of drug costs through reinsurance, and the plan pays 20%. Beneficiaries enter this phase when their true out-of-pocket (TrOOP) costs for the year cross a predetermined limit ($8,000 in total drug costs for 2024)

Deductible Phase

Initial Coverage Phase

Beginning 1/1/2025:

($2,000 MOOP)2

Catastrophic Phase

• The coverage gap phase is eliminated

25% Member Coinsurance

• Beneficiary OOP costs are capped at $2,000 annually, and beneficiaries have ability to "smooth" cost sharing over the remaining plan year

65% Plan Liability

20% Man. Liability

• The health insurer liability is increased to 60% in the catastrophic phase

10% Manufacturer Liability

20% Fed. Reinsurance

• Manufacturers pay 10% on all Rx in initial coverage phase, 20% in catastrophic phase, including on scripts for LIS beneficiaries

1. The Coverage Gap Discount amount only applies to non-LIS patients. Manufacturer discount counts towards True Out-of-Pocket (TrOOP); patient Out-of-Pocket of $3,200 is estimated.

2. Manufacturer discount does not count towards Member Out-of-Pocket (MOOP). 2025 coverage limits not finalized. The manufacturer discount applies to brand-name drug costs only. For generic drug costs, plans paid 75% in the coverage gap phase in 2023 and 2024, and to pay 75% in the initial coverage phase in 2025, and Medicare to pay 40% in the catastrophic coverage phase in 2025.

Sources:https://www.milliman.com/en/insight/primer-on-medicare-part-d-prescription-drug-rebates-inflation-reduction-acthttps://www.kff.org/medicare/issue-brief/changes-to-medicare-part-d-in-2024-and-2025-under-the-inflation-reduction-act-and-how-enrollees-will-benefit/

• In , manufacturers were subject to a mandatory discount during the coverage gap for some scripts

• In , all scripts are subject to mandatory discount in both the initial (10%) and catastrophic (20%) phases (annual average of ~19%)

1. A 'higher-priced' medicine that has a monthly WAC price of $5,000 or more and will hit the catastrophic phase with first 1 or 2 scripts.

2. Example reflects first script occurs in January (Month 1).

• In , manufacturers were subject to a mandatory discount during the coverage gap for some scripts

• In , all scripts are subject to mandatory discount in both the initial (10%) and catastrophic (20%) phases (annual average of ~19%)

1. A 'higher-priced' medicine that has a monthly WAC price of $5,000 or more and will hit the catastrophic phase with first 1 or 2 scripts.

2. Example reflects first script occurs in January (Month 1).

• In , manufacturers were subject to a mandatory discount during the coverage gap for some scripts

• In , all scripts are subject to mandatory discount in both the initial (10%) and catastrophic (20%) phases (annual average of ~19%)

1. A 'higher-priced' medicine that has a monthly WAC price of $5,000 or more and will hit the catastrophic phase with first 1 or 2 scripts.

2. Example reflects first script occurs in January (Month 1).

2. Example reflects first script occurs in January (Month 1).

3. H2 = second-half ; FY = Full-Year ; LIS = Low-Income Subsidy

• In , manufacturer discount applicable once patient reached coverage gap

• In , manufacturer discount begins once patient meets their deductible. Impact unfavorable in Q1/Q2, but the H2 and FY discount is lower

2. Example reflects first script occurs in January (Month 1).

3. H2 = second-half ; FY = Full-Year ; LIS = Low-Income Subsidy

• In , manufacturer discount applicable once patient reached coverage gap

• In , manufacturer discount begins once patient meets their deductible. Impact unfavorable in Q1/Q2, but the H2 and FY discount is lower

Disclaimer

Pfizer Inc. published this content on March 28, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on March 28, 2025 at 15:20 UTC .