IRA Spelling Trouble for Community Pharmacies, and Patient Access Could be Next

By: Ranier Simons, ADAP Blog Guest Contributor

The Inflation Reduction Act of 2022 (IRA) contains multifaceted goals to improve healthcare access and lower healthcare costs, including prescription drug costs (CMS, 2025). The Medicare Drug Price Negotiation program is one such initiative, according to the Centers for Medicare and Medicaid Services (CMS). This initiative authorizes Medicare to directly negotiate the price of prescription drugs with manufacturers for outpatient drugs under Medicare Part D and later for physician-administered drugs under Part B. The initial ten drugs identified for “negotiation” have already been selected, and their new pricing will go into effect in 2026 under what has been termed the Maximum Fair Price (MFP). Whether the IRA’s lofty goals – such as lowering patient drug costs and lowering insurance premiums – are successful remains questionable. However, community pharmacies are already being adversely impacted by the new, untested pricing scheme, which could spill over and cause harm to patients. The National Community Pharmacists Association (NCPA) recently released an analysis of the MFP’s potential unintended effects on pharmacies' financial stability and cash flow (NCPA, 2025). The picture is bleak. 

Photo Source: NCPA

Implementing the MFP is a departure from the current status quo of pharmacy reimbursement. Presently, pharmacies purchase drugs, pay their acquisition cost, and are subsequently reimbursed by PBMs after filing their claim. The drugs on the MFP list require a different payment mechanism. The MFP program requires payment from PBMs and refunds from manufacturers. In general, PBMs will reimburse pharmacies an amount equal to the MFP, and then manufacturers will be required to reimburse pharmacies for the difference between the acquisition price and the MFP (NCPA, 2025). The mechanisms for implementation and the amounts paid are the sources of cash flow concern for pharmacies.

The MFP payments will be made utilizing a system in development called the Medicare Transition Facilitator (MTF) (NCPA, 2025). It will have two parts, the MTF Data Module (MTF DM) and the MTF Payment Module (MTF PM). All parties must enroll in the MTF DM to ensure compliance with open data exchange for expedient application of negotiated prices. The MTF PM is optional for manufacturers who can make refund payments via it or by another means of their choosing. The time delay in reimbursement payments for both the PBM payment and the manufacturer refund is an issue.

NCPA’s analysis of historical payment data indicates that PBMs currently reimburse pharmacies around 14 days after a claim is filed (NCPA, 2025). They constructed a payment model of cash flow, indicating the new MTF PM approach would add a delay to completed reimbursement. NCPA anticipates that, on average, manufacturers would refund pharmacies around one week after PBMs submitted reimbursement. This would mean pharmacies would have less cash for operating expenses while waiting for full reimbursement. The PBM payment would theoretically be equal to the MFP, which is a significant discount on the acquisition cost, on average 60 percent (NCPA, 2025). Thus, a pharmacy would have to function with a cash flow deficit until the manufacturer’s refund was paid, potentially making them whole regarding what they paid to acquire the drug. Moreover, this leads to potential issues of reimbursement amounts.

Photo Source: Lagniappe Pharmacy

Under the status quo, pharmacies already deal with issues of under-reimbursement. There is potential for additional harm under an MFP scenario. Presently the NCPA found that pharmacies are operating with small margins of profit. Under the MFP framework, pharmacies could bring even less revenue (NCPA, 2025). Currently, pharmacies operate profitably with payments higher than their acquisition costs. Under the MFP PM system, profit due to pricing differential is lowered or eliminated. Additionally, the MFP is the maximum possible PBM reimbursement. There is a possibility that PBM reimbursement may be lower than the MFP (NCPA, 2025). Thus, pharmacies could end up at a loss when net reimbursement is the difference between the acquisition cost and the sum of the PBM reimbursement and manufacturer refund.

Patients’ access to medications could be harmed if pharmacies close due to their inability to operate under financial losses. Additionally, NCPA posits that pharmacies associated with 340B Covered Entities could be adversely affected. Their model, which assumes an operational average of 15 fills of MFP medications per week, would equal a typical annual loss of revenue in the range of $240,060.60 to $ 433,633.20 (NCPA, 2025). Losses on this level would mean termination or significant scaling back of services for vulnerable populations that 340 B Covered Entities serve. NCPA also emphasizes in their reporting that the MFP does not mandate a dispensing fee, nor does any IRA document indicate any dispensing fee guidance (NCPA, 2025).

The NCPA based its analysis and modeling on available data of historical Medicare prescription drug data. However, the inferences made could be drastically different once the MFP PM approach is put into effect. Delays in payments from PBMs and manufacturers could be longer than expected, leading to even greater financial instability due to a poorer influx of cash flow. Terms between wholesalers and pharmacies could change further, negatively affecting pharmacy reimbursement levels. There is the theoretical possibility of improvements in revenues for pharmacies where the MFP manufacture refund would be more than they usually receive for reimbursement. However, this is not what NCPAs analysis indicates as a widespread possibility (NCPA, 2025). The end result is patients unable to access the medications they need.

Photo Source: ConsumerMedSafety.org

The bottom line is that while well-intentioned, the MFP could have a host of unexpected negative potential outcomes. Many details of the MTF have not been completely fleshed out. Moreover, NCPA analysis indicates that the amount of potential financial loss increases as the volume of a pharmacy’s MFP-associated drug prescription fills increases (NCPA, 2025). Being engaged with the continued development of the MTF-DM and MTF-PM is crucial to ensure that policymakers do not end up codifying effectuating harm.

[1] CMS. (2025, January 20). Inflation Reduction Act and Medicare. Retrieved from https://www.cms.gov/inflation-reduction-act-and-medicare#:~:text=People%20with%20Medicare%20will%20benefit,Changes%20to%20Medicare%20Part%20B

[2] National Community Pharmacists Association (NCPA). (2025, January). Analysis on Pharmacy Cash Flows. Retrieved from https://ncpa.org/sites/default/files/2025-01/January2025-ThreeAxisAdvisors-Unpacking-the-Financial-Impacts-of-Medicare-Drug-Price-Negotiation.pdf

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.