Dozens of pharma companies raised prices faster than inflation, triggering Medicare rebates

Photo: Jose Luis Pelaez/Getty Images

Dozens of pharmaceutical companies will be required to pay rebates to Medicare for price hikes on prescription drugs that went against the mandate of the Inflation Reduction Act, the Biden Administration announced yesterday.

For the last quarter of 2023, 48 Medicare Part B drugs raised their prices faster than inflation, and some drug companies raised prices of certain medications faster than inflation for every quarter over the last year, according to the White House announcement.

These drugs may be subject to inflation rebates in the first quarter of 2024. Starting in January, some Medicare beneficiaries who take these 48 prescription drugs – including drugs used to treat cancer and fight infections – will have lower coinsurance than they would have paid otherwise, and their out-of-pocket costs may decrease by $1 to as much as $2,786 per average dose, the administration said.

While these drugs were not immediately named, a companion report released by the Department of Health and Human Services yesterday names the first 10 drugs under Part D selected for the first cycle of Medicare drug price negotiations, another provision of the Inflation Reduction Act.

These first 10 drugs make up nearly 20% of spending in the Medicare Part D drug benefit, according to the report.

The Part D drugs selected for price negotiations are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and NovoLog/Fiasp. 

Millions of Medicare enrollees take one or more of these drugs to treat serious conditions, such as blood clots, diabetes, cardiovascular disease, heart failure, autoimmune conditions and chronic kidney disease, HHS said.

WHY THIS MATTERS

The Inflation Reduction Act narrowly passed in August 2022, with a tie-breaking vote by Vice President Kamala Harris. 

Among other provisions, the bill keeps drug prices in Medicare from rising faster than inflation.

The Inflation Reduction Act requires companies whose prices rise higher than inflation, to pay rebates back to Medicare, saving seniors who take these drugs between $1 and $2,786 per dose on their medication. 

In June, the Centers for Medicare and Medicaid Services released a list of 43 drugs whose prices rose faster than inflation.

CMS said at the time that it intended to send the first invoices in 2025 to manufacturers for the rebates owed to Medicare in 2023 and 2024. Some people with Medicare Part B could pay lower coinsurance on those 43 drugs, CMS said.

Over the last four quarters, 64 drugs in total had prices that increased faster than inflation and may be subject to inflation rebates because of the Inflation Reduction Act. Some drugs, such as Signifor, used to treat an endocrine disorder, raised prices faster than inflation every quarter since the Inflation Reduction Act's inflation rebate provision went into effect, according to the White House report.

Some Medicare beneficiaries who take Signifor could save $311 per monthly dose starting in January because of the law.

THE LARGER TREND

The Inflation Reduction Act allows Medicare to directly negotiate lower prescription drug prices, and it has capped the cost of insulin for Medicare beneficiaries at $35 a month.

Due to the bill, in 2024, Part D enrollees will no longer pay 5% co-insurance when they reach the catastrophic phase of their benefit – meaning that some beneficiaries' prescription drug costs will be capped at about $3,500 next year.

On average, Americans pay two to three times more than consumers in other developed countries for prescription drugs.

Last week, the Biden administration announced a proposal to put drug companies on notice if products developed using federal funds are not made available to the public on reasonable terms, including those based on price. The proposal would promote the federal government's ability to license a patent -- such as those used to create life-saving drugs -- to a competitor with the goal of increasing competition and bringing costs down for families.

HHS announced that the Administration for Strategic Preparedness and Response (ASPR) is making fair pricing a standard part of contract negotiations for medical products developed or purchased.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org