Medicare Drug Price Negotiation Program: The Physician Office Outlook for Part B Drugs

The Inflation Reduction Act (IRA) established the Medicare Drug Price Negotiation Program (DPNP), with negotiated prices determined and already taking effect for selected Part D drugs in 2026 and 2027. In 2028, Part B drugs will also be selected. Each group of negotiated drugs is defined by its initial price applicability year (IPAY), the year in which negotiated prices are implemented.

Magnolia Market Access examined historical utilization of Part B drugs across physician offices and hospital outpatient departments (HOPDs) to assess how site-of-care patterns vary by IPAY group and which provider settings may be most exposed to negotiated drug prices. The analysis includes Part B covered drugs selected for IPAY 2028 (Botox/Botox Cosmetic, Cimzia, Entyvio, Orencia, and Xolair) and projected selections for IPAY 2029 through 2032 drawn from Magnolia Market Access’ proprietary IRA DPNP model.

Findings

Between 2021 and 2025, the percentage of drug administrations occurring in the physician office (versus the HOPD) decreased from 74.4% to 67.6%. This is consistent with a broader market trend driven by practice consolidation and shifts in site of care toward the HOPD. When the analysis was narrowed to IPAY drugs, however, physician-office administration trends were not always consistent with the overall pattern.

  • For drugs selected for IPAY 2028, the share of physician office administrations relative to HOPD administrations increased from 70.8% to 72.4%.
  • Drugs projected for IPAY 2031 showed the largest increase in physician-office share, rising from 43.4% to 49.7%, while projected IPAY drugs for 2032 increased in physician-office administration from 48.6% to 54.4%.
Percent of Part B Drug Administrations in the Physician Office versus HOPD Setting Line chart showing the percent of Part B drug administrations in the physician office versus hospital outpatient department setting from 2021 through 2025. Percent of Part B Drug Administrations in the Physician Office (vs HOPD) Setting 74.4% 70.8% 48.6% 46.9% 46.2% 43.4% 72.4% 67.6% 54.4% 49.7% 44.5% 44.5% 2021 2022 2023 2024 2025 % All Part B Drugs % IPAY 2030 (Projected) % IPAY 2028 % IPAY 2031 (Projected) % IPAY 2029 (Projected) % IPAY 2032 (Projected)

Implications

These findings highlight the importance of assessing the long-term effects of the IRA DPNP by provider setting and drug cohort. Nearly three-quarters of IPAY 2028 drug administrations occur in physician offices. The increased office share for projected IPAY 2031 and 2032 drugs also shows that physician practices are already delivering a substantial share of treatment with these products, making their potential exposure relevant well before negotiated prices take effect.

Practices that rely heavily on drug administration could face financial pressure if reimbursement changes reduce the margins available to support care delivery. This pressure could influence prescribing toward clinically appropriate alternatives that have not been selected for negotiation. Decreased margins could also contribute to practice sales and consolidation, resulting in fewer sites for patient care, potentially shifting care to higher-cost HOPD settings, and also pose access challenges for patients.

Methodological Notes

Magnolia Market Access analyzed Medicare Research Identifiable Files (2021 through 2025), including Part B drug administrations in HOPDs and physician offices. Drug administration services in these settings are reimbursed under the Medicare Outpatient Prospective Payment System (OPPS) and Medicare Physician Fee Schedule (MPFS), respectively. Physician-office share is the percentage of administrations occurring in physician offices relative to combined physician-office and HOPD administrations included in the analysis. The analysis excludes drugs that are not reimbursed separately, vaccines, and products that are not subject to the DPNP, such as blood products, radiopharmaceuticals, and skin substitutes.

The IPAY 2028 group reflects announced drug selections by the Centers for Medicare & Medicaid Services (https://www.cms.gov/files/document/factsheet-medicare-negotiation-selected-drug-list-ipay-2028.pdf). The IPAY 2029 through 2032 groups reflect Magnolia Market Access’ proprietary projections and are not confirmed CMS selections. To learn more about our IRA projections work, please contact us at [email protected].