Copay smoothing is a lesser-known provision of the Inflation Reduction Act (IRA). Implementation is scheduled for the 2025 benefit year and is required of the prescription drug plans offered under both Medicare Part D and Medicare Advantage. Plans will be required to actively reach out to enrollees who are likely to benefit from spreading out cost sharing for medications over time, interest free. The motivation for this provision is to mitigate prescription abandonment by Medicare enrollees. Abandonment rates are over 40% for medications with a cost greater than $500 and approach 50% for drugs more than $2000.1

The onus for implementing copay smoothing is on Medicare plans. Medicare enrollees will be screened, using the previous year’s claims data; the determination will be made if they are likely to benefit from smoothing; and enrollees will be informed that they have this option. While this process is largely a data management and processing issue, the larger context is that once the patient hits their $2000 out-of-pocket spending limit, Part D plans will need to cover 60% of brand drug costs, while the Centers for Medicare & Medicaid Services (CMS) and manufacturers chip in 20% each. The net results are potentially diminished cash flow and higher liabilities for Medicare drug plans.

It is possible that we could see more consolidation among Medicare drug plans. We may see smaller plan sponsors dropping out of the market, leaving large plans to take up the slack. While the large plans may be better able to navigate the highly regulated intricacies of this market, such consolidation would certainly curb choice among Medicare enrollees.

For manufacturers, the developing picture is less clear. Copay smoothing may (and hopefully will) improve patient adherence and reduce prescription abandonment. These gains will be beneficial. By themselves, though, they may not necessarily have more than modest benefits on a product’s profit and loss.

Yet there may be opportunities for incremental improvements that elevate the medium- and longer-term value of drugs. For example, assume we have a drug with significant utilization among Medicare beneficiaries that also suffers from high abandonment or spotty adherence. An HCP may be less willing to prescribe this drug since she “doesn’t see the benefits for her patients” or feels “my patients cannot afford this drug.” Although Medicare patients cannot take advantage of the patient assistance programs available to patients covered by commercial insurance, now (in 2025) Medicare patients may benefit from copay smoothing. Remembering this may encourage HCPs to give certain drugs a chance and thus see their clinical value.

The manufacturer may be able to develop CMS-compliant materials that help HCPs and their patients understand the benefits of copay smoothing. Patient-directed materials may help patients ask the right questions of their Medicare insurance provider.

Taking this one step further, improvements in the consistency and duration of therapy among users may allow real-world evidence generation to demonstrate better (and perhaps more realistic) outcomes for this drug and thus improve the medical and economic value profile.

This scenario probably does not apply to a specific drug, but it illustrates that there may be opportunities for incremental actions that, over time, can generate positive results. You may just need to look for them.


  1. Doshi JA, Li P, Huo H, Pettit AR, Armstrong KA. Association of patient out-of-pocket costs with prescription abandonment and delay in fills of novel oral anticancer agents. J Clin Oncol. 2018;36(5):476-482.