Preparations for IRA’s Destruction of Part B Margins Could Begin in 2026

By Angela Maas

Themes within the U.S. health care system to watch in 2026 include the impact on “significant” drug channel disruption from GLP-1s (“the somewhat thinner elephant in the room”), the evolution of the PBM model and the deflation of the gross-to-net bubble, which, in turn, is leading to the net pricing drug channel (NPDC), said longtime industry expert Adam Fein, Ph.D., president of Drug Channels Institute, an HMP Global company, during his Drug Channels Outlook 2026 webinar on Dec. 12.

But provider groups in particular should take note of one additional trend, he said: the impact on buy and bill starting in 2028, when the Inflation Reduction Act (IRA) mandates the inclusion of provider-administered Medicare Part B drugs in Medicare drug price negotiations.

While not much is currently happening with respect to buy and bill, “we are on the cusp of some very significant changes in anticipation of changes that are coming in a couple of years,” he predicted. “So some of the positioning for those future changes is going to start to happen in 2026,” which he termed the “IRA headwinds.”

Fein outlined a couple of issues to watch. First, the IRA did not specify if the Medicare-negotiated maximum fair price (MFP) would be averaged into the average sales price (ASP). “But CMS has decided actually it should be,” he noted. This, he maintained, is “kind of unfortunate because the average sales price was actually one of the very few market-based price benchmarks out there.” ASP is based on actual transactions, not list prices, and is updated quarterly.

This development means that the government-set MFP will be averaged into the market basket of ASP, he explained, and publishing ASPs for those drugs will be discontinued. This will result in commercial payers needing to find another way to reimburse providers beyond ASP-plus X percent. “And that could either be good, or it could be bad for the providers,” asserted Fein.

The “ultimate effect,” he explained, will occur in 2028 when MFPs for Part B drugs take effect: “It’s going to destroy the Part B margins.”

He cited an Avalere Health Advisory study that projected oncology and immunology practices will see an approximately 40% to 80% reduction in their margins based on expected Part B MFPs.

In addition, “you’re going to see some pretty foundational changes to 340B as well because remember the MFP will likely be lower than the ASP — probably in most cases it will be — and therefore, again, the 340B spreads are going to start to be pressured.”

All of this will lead to provider practices questioning their ability to survive and wondering “are the economics going to change so much that I need to think about other ways to get paid beyond…essentially drug margin?”

Margins vary based on types of practices, said Fein, who noted that “oncology practices get about 90% of their revenue from drugs.” While that percentage may be lower for others, “a significant share of the revenues and profits comes from buying low and selling high.…That may not be very sustainable if we are moving to a net price world.”

Another dynamic may be that practices decide they won’t use MFP drugs, which means that those agents “may face competitive pressures from products that have a plainly defined and obviously lower price.”

How Will Wholesalers Respond?

It remains to be seen how this may impact wholesalers, which have now become the “leading entities pushing vertical integration in the buy-and-bill channel” and own the largest group purchasing organizations (GPOs) and physician practices, a trend that Fein discussed during his 2025 outlook webinar.

“And in the last three years, they’ve spent over $16 billion buying the management services organizations which run practices in oncology, ophthalmology, gastroenterology and urology,” he revealed. “For the most part, wholesalers are looking at this as maybe in addition to their profits because the margins on some of these businesses are higher than their traditional drug distribution business. And obviously it gives them access to some of their clients.”

Looking ahead, Fein said, “wholesalers are getting into position to become market access experts on the buy-and-bill provider-administered market just as it’s about to undergo structural change as the IRA headwinds hit.…If you see wholesalers start to hire executives who used to work at PBMs or health plans, you’ll know it’s starting to happen.”

Whether wholesalers actually can do this, though, is up for debate. The entities are “fundamentally transactional intermediaries,” he pointed out, and boast management teams that “grew up in that part of the business.” And while they may not have a complete understanding of medical benefit management strategies, “they are quick learners. And the people who run these companies are very smart and very savvy. So I expect they’re going to start moving into this within the next year.”