Projected prescription drug expenditures in 2024: Looking ahead to the inflation reduction era

The passage of the Inflation Reduction Act (IRA) of 2022 put prescription drugs in the spotlight in 2023. Throughout the year, the Centers for Medicare and Medicaid Services unveiled guidance for the implementation of this legislation, the most significant reform to drug reimbursement in the US since the enactment of Medicare Part D. With the exception of inflation rebates, the drug-related provisions of the IRA will be gradually implemented in the 2024-2028 period,1 making 2023 the end of an era in the pharmaceutical market. The 2023 drug expenditure data published in this issue of AJHP will set the baseline for the future evaluation of the consequences of this major policy reform.2 Until then, the drug expenditure report provides valuable insights into recent trends in the pharmaceutical market. The year 2023 saw the largest relative increase in prescription drug spending in over 20 years, an increase of 13.6% ($89 billion), from $633.5 billion to $722.5 billion. These figures represent gross expenditures—the amount that would be spent on prescription drugs at gross prices in the absence of manufacturer discounts.3 This marked increase in spending was primarily the result of higher utilization and the entry of new drugs, with price changes playing a modest role in rising expenditures. It is unclear to what extent this increase in gross expenditures may have been offset by manufacturer discounts.4,5