CMS says inflation rebates for prescription drugs resulted in savings

Photo: Jeff Lagasse/Healthcare Finance News

Upwards of 41 drugs available through Medicare Part B will have a lowered Part B coinsurance rate from April 1 to June 30 if the drug company raises prices faster than the rate of inflation, according to the Centers for Medicare and Medicaid Services.

The Department of Health and Human Services touted the move as being the result of the Inflation Reduction Act, which passed under the Biden Administration. The IRA established the Medicare Prescription Drug Inflation Rebate Program. Some people with Medicare who use these drugs during that time period may save between $1 and $3,575 per average dose, depending on their individual coverage.

HHS Secretary Xavier Becerra said lowering prescription drug costs was a “top priority” for the Biden White House.

Drug and healthcare affordability are top concerns among voters this presidential election season, according to KFF.

WHAT’S THE IMPACT?

The Inflation Reduction Act requires drug companies to pay rebates to Medicare when prices increase faster than the rate of inflation for certain drugs.

CMS intends to begin invoicing prescription drug companies for rebates owed to Medicare no later than fall 2025. The rebate amounts paid by drug companies will be deposited in the Federal Supplementary Medical Insurance Trust Fund, which CMS said will help ensure the long-term sustainability of the Medicare program.

The Medicare Prescription Drug Inflation Rebate Program is just one of the Inflation Reduction Act’s prescription drug provisions aimed at lowering prescription drug and healthcare costs.

In addition to this program, the law expanded eligibility for full benefits under the Low-Income Subsidy program (LIS or “Extra Help”) under Medicare Part D at the beginning of this year. Nearly 300,000 people with low and modest incomes are subject to the expansion.

A public education campaign is underway to reach the more than three million people who are likely eligible for the program, but not yet enrolled. As of January 1, some people enrolled in Medicare Part D who have high drug costs now have their annual out-of-pocket costs capped at about $3,500. In 2025, all people with Medicare Part D will have a $2,000 cap on annual out-of-pocket prescription drug costs.

THE LARGER TREND

The 2022 Inflation Reduction Act gave the Centers for Medicare and Medicaid Services the ability, for the first time, to negotiate drug prices in Medicare for a small group of prescription drugs.

In December, the Department of Health and Human Services named 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. The Part D drugs selected for price negotiations are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and NovoLog/Fiasp.

Also in December, a Commonwealth Fund report showed Americans pay more for brand-name prescription medications than do residents of most other countries. Per capita spending on pharmaceuticals is nearly three times the average of other member nations of the Organisation for Economic Co-operation and Development (OECD).

The report compared the prices of the first 10 drugs chosen for Medicare price negotiations to prices for the same drugs in seven other countries. In all but one case, the U.S. ranked the highest. For six drugs, Switzerland had the second highest price, and Australia usually showed the lowest price.
 

Jeff Lagasse is editor of Healthcare Finance News.
Email: [email protected]
Healthcare Finance News is a HIMSS Media publication.

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