What changed in 2025
The IRA eliminated the Part D coverage gap, capped beneficiary out-of-pocket spending at $2,000 annually, and replaced the Coverage Gap Discount Program with the Manufacturer Discount Program (MDP). Manufacturers now owe 10% in the initial coverage phase and 20% in the catastrophic phase for applicable drugs.
These changes alter both the gross-to-net waterfall and the patient adherence curve. Models built on pre-IRA assumptions systematically misstate launch year revenue.
Budget impact and launch forecast updates
Adherence assumptions should be re-estimated: capping OOP at $2,000 measurably improves persistence for high-cost specialty drugs, especially in oncology and rare disease.
Gross-to-net waterfalls should explicitly model MDP liabilities by phase, the small-biotech exception (if applicable through 2028), and the interaction with 340B and Medicaid best price.
Where the small-biotech exception matters
Qualifying small biotech manufacturers are exempt from MDP discounts through 2028. The exception is narrowly defined and time-limited; launch sequencing and indication expansion timing materially affect whether a product qualifies.
Key takeaways
- Re-estimate persistence and adherence under the $2,000 OOP cap; pre-IRA curves understate revenue for high-cost specialty.
- Model MDP liabilities by phase explicitly in the gross-to-net waterfall.
- For eligible manufacturers, sequence launches and indications to preserve the small-biotech exception through 2028.
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