Medicare: Dozens of Drugmakers Raised Prices Faster Than Inflation

Medicare: Biden administration slams pharmaceutical companies for steep price hikes on certain prescription drugs.

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Dozens of pharmaceutical companies will be required to pay rebates to the Medicare program after they were found to have raised prices of 48 Part B drugs faster than the rate of inflation.

There were "outrageous price hikes" on medications that more than 750,000 seniors take annually, according to a recent Biden administration announcement. Drug companies are required to pay the rebates under the administration’s Inflation Reduction Act, which was passed last year.

To that end, the Department of Health and Human Services (HHS) has released the list of the 48 drugs that hiked prices faster than inflation and may be subject to rebates in the first quarter of 2024. Starting on January 1, some beneficiaries who take these drugs will have a lower coinsurance than what they would have otherwise and their out-of-pocket costs may decrease by $1 to as much as $2,786 per dose, HHS said.

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The administration said that a total of 64 drugs, whose prices rose faster than inflation during the last four quarters, may be subject to rebates. This includes the endocrine disorder drug Signifor, it said, adding that beneficiaries who take this drug may save $311 per monthly dose starting in January.

The announcement comes on the heels of the closing of Medicare's annual open enrollment period for 2024.

New HHS report on the first 10 drugs selected for talks

Earlier this year, the Centers for Medicare & Medicaid Services (CMS) listed the first 10 drugs selected for talks with pharmaceutical companies under the Medicare drug price negotiation program.

HHS has now issued a new report on the 10 drugs selected for that first cycle of the program. The report found that total Medicare Part D spending on the 10 drugs more than doubled from 2018 to 2022 — more than three times as fast as for all Part D drugs over the same period, HHS said.

“These first 10 drugs make up nearly 20 percent of spending in the Medicare Part D drug benefit,” said Rebecca Haffajee, principal deputy assistant secretary under the Assistant Secretary for Planning and Evaluation (ASPE), which produced the report. “Negotiating prices on these drugs has the potential for significant savings to enrollees, taxpayers, and the Medicare program. As additional drugs are selected for negotiation in future years, the benefits of negotiation will continue to grow.”

Drug companies push back

Drugmakers have fought back against the price negotiation talks, saying that lower revenues for pharmaceutical companies will discourage investments in new technology and medicines to help find cures and treatments, as described in a July 23 New York Times report.

Guidance on CMS and HHS programs

The CMS and HHS provide a variety of reports and guidance documents on these and other Medicare programs. For more information on reducing coinsurance for certain Part B rebatable drugs under the Medicare prescription drug inflation rebate program, see this CMS fact sheet. Revised guidance in a Q and A format on the program, can be found here. For revised guidance on Part D, visit this CMS site.

For more information on the Medicare drug price negotiation program, the HHS provides the full ASPE report here.

Senior News Editor

Esther D’Amico is Kiplinger’s senior news editor. A long-time antitrust and congressional affairs journalist, Esther has covered a range of beats including infrastructure, climate change and the industrial chemicals sector. She previously served as chief correspondent for a financial news service where she chronicled debates in and out of Congress, the Department of Justice, the Federal Trade Commission and the Commerce Department with a particular focus on large mergers and acquisitions. She holds a bachelor’s degree in journalism and in English.

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