The Inflation Reduction Act and Hospice Pharmacy: Real Savings, Real Limits

Over the past year, many hospice leaders have heard some version of this:

“Drug prices are finally coming down.”

That’s true. But inside a hospice operation, the reality is more nuanced.

The Inflation Reduction Act is starting to reshape drug pricing through Medicare negotiation, inflation caps, and structural changes that are already showing up in pharmacy spend.

For hospice, the impact is real. But it’s not where most people expect.

Where prices actually moved

The first wave of pricing pressure has hit high-cost, high-utilization Medicare drugs:

• Eliquis
• Januvia
• Farxiga
• Entresto
• Imbruvica

These are meaningful clinical therapies with historically high price points. On paper, this looks like a major win.

Why most still don’t make it onto hospice formularies

Even after price reductions:

• Per-day costs are still above hospice PPD thresholds
• Clinical use remains case-specific, not routine
• The hospice still carries the cost under the Medicare benefit

A 20–40% price drop sounds significant, but in hospice economics, that often isn’t enough.

Here are some examples:

• Anticoagulants like Eliquis may be appropriate in select cases, but broad use can erode margin quickly
• SGLT2 inhibitors like Farxiga have emerging value, but are not core hospice meds
• Oncology agents like Imbruvica remain outside sustainable models

Bottom line: prices are down, but not low enough to change core formulary strategy.

Where the IRA is helping hospice

This is where the real impact shows up. Not in adding new drugs. In stabilizing the overall pharmacy budget.

1. Lower ceiling on high-cost outliers. Fewer cases that break the budget. Less volatility in PPD.
2. Inflation caps are working quietly. Fewer mid-year price spikes. More predictable spend.
3. Pressure on legacy pricing models. As rebates compress, spread-based models tighten. Transparent pricing becomes more competitive.

This is already happening.

What this means for hospice leaders

The takeaway is not “drug costs are solved.” It’s this: the structure of pharmacy spend is changing, even if the formulary isn't.

Practical implications:

• Expect modest downward pressure on total PPD.
• Expect improved predictability, more than dramatic savings.
• Stay disciplined on formulary additions.
• Re-evaluate vendor models. This environment exposes differences fast.

The bottom line

The Inflation Reduction Act is not a formulary expansion event for hospice. It’s a financial stabilization event. Costs at the top end are coming down. Price growth is being constrained. Variability is decreasing. That combination matters. Even if most of these drugs never become standard hospice therapies. If you’re reviewing pharmacy spend this year, the signal is there. It just isn’t where most people were told to look.

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