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34 Medicare Drugs With Price Increases Above Inflation Face Penalties

Beneficiaries will see lower coinsurance for these Part B medications

The names of 34 Part B prescription drugs whose prices were raised more than the rate of inflation were released by the Centers for Medicare & Medicaid Services (CMS) on Sept. 13, the third set of medications the agency has identified. Starting Oct. 1, beneficiaries could pay less out of their pockets for this latest group of drugs than they would have before the new drug law.

Under the prescription drug provisions of the 2022 Inflation Reduction Act, drugmakers who raise their prices higher than the rate of inflation will have to pay a penalty, in the form of a rebate, to Medicare. The rebate will be the difference between what the price increase would have been if the manufacturer had stuck to the inflation rate for its increase and what the actual price hike was. 

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Drug companies won’t have to pay the rebates for these 34 medicines until 2025, but starting on April 1, 2023, the 20 percent coinsurance that consumers are charged began to be calculated based on what the price would have been if any price increase had been held to the inflation rate. Each quarter, CMS will issue a new list of drugs that will be subject to rebates, based on the rate of inflation. Which drugs are subject to rebates could change each quarter as the rate of inflation changes. 

“This is a sign that this law is in effect and working to reduce prescription drug prices and costs,” says Leigh Purvis, AARP senior director of health care costs and access. “We’re already seeing the benefits of this new law.”

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These 34 medications are all paid for under Medicare Part B, which means they are administered in a doctor’s office or other outpatient setting. Many of the drugs identified are either chemotherapy medicines to treat cancer or address the aftereffects of chemotherapy, organ transplants or chronic kidney disease. 

CMS will not identify which medications paid for under the Part D prescription drug benefit will be subject to a rebate until later this year. Part D medications are generally taken by patients in pill form and represent the majority of prescription drugs used by Medicare enrollees.

According to CMS, Medicare enrollees who need one of the 34 Part B drugs identified could save between $1 and $618 per average dose of these medicines between Oct. 1 and Dec. 31. How much a beneficiary pays for their prescription drugs depends on their Medicare coverage. For example, the 20 percent Part B copay is covered for many people who have a Medicare supplemental or Medigap policy. And the copay and coinsurance for people with Medicare Advantage plans varies depending on the plan and where someone lives.

Many of the drugs included in this list of 34 are expensive. For example, total spending on Padcev, used to treat cancer, averaged nearly $93,000 per beneficiary in 2021 and resulted in nearly $155 million in Part B spending

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“This is a new protection for people who were previously exposed to these high price increases,” Purvis says. “Now your coinsurance is going to be based on what the drug’s price would have been had it increased by no more than inflation.”

Overall prices could drop

If the rebate provision in the new law had been in effect between July 2021 and July 2022, 1,216 products might have had to pay the new rebates because their price increases exceeded the inflation rate of 8.5 percent, an analysis from the Department of Health and Human Services shows. The average price increase for these drugs was 31.6 percent. This Health and Human Services report analyzed prescription drugs for both Part B and Part D.

A report by the Congressional Budget Office, a nonpartisan watchdog, found that on average, drug prices in both Part B and Part D will be 2 percent lower in 2031 than they would have been without the inflation rebate provision. The report also predicts that if drugmakers keep their price increases below the rate of inflation to avoid paying the penalty, private insurance will also benefit from those lower prices. 

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“To the extent that price increases are now being tracked closely and they’ll be penalized, it will certainly give drug companies pause when considering big price increases in the future,” Purvis says.

Rebate drugs

These 34 prescription drugs will be subject to a rebate to Medicare from Oct. 1 to Dec. 31, 2023.

  • Adcetris: Treats Hodgkin lymphoma cancer
  • Aggrastat: Used to prevent blood clots of heart attacks
  • Akynzeo: Prevents chemotherapy-induced nausea and vomiting
  • Atgam: Keeps the body from rejecting the kidney/aplastic anemia after a kidney transplant 
  • Bicillin C-R: Treats bacterial infections 
  • Bicillin L-A: Treats syphilis and upper respiratory tract infections 
  • Blincyto: Treats leukemia
  • ChiRhoStim: Used to diagnose pancreas function
  • Cresemba: Treats fungal infections
  • Crysvita: Treats x-linked hypophosphataemia, a hereditary blood disorder
  • Fragmin: An anticoagulant that treats blood clots 
  • Humira: Reduces severe rheumatoid arthritis
  • Hypertet: Prevents tetanus
  • Imlygic: Treats lemanoma (skin cancer)
  • Infugem: Treats breast, non-small cell lung, ovarian and pancreatic cancer
  • Leukine: Lowers the risk of infection after chemotherapy
  • Lupron Depot-PED: Treats central precocious puberty in children.
  • Minocin: Treats bacterial infections
  • Nipent: Treats cancer, including hairy cell leukemia
  • Nplate: Treats immune thrombocytopenia (ITP)
  • Oncaspar: Treats acute lymphoblastic leumenia
  • Padcev: Treats advanced urothelial cancer
  • Panhematin: Treats blood disorders
  • Pemetrexed: Treats lung cancer
  • Romidepsin: Treats T-cell lymphoma
  • Rybrevant: Treats advanced lung cancer
  • Signifor LAR: Treats Cushing's disease
  • Sotalol: Treats life-threatening heart rhythm problems
  • Sylvant: Treats Castleman disease
  • Synribo: Treats leukemnia
  • Vabomere: Treats complicated urinary tract infections
  • Vectibix: Treats colorectal cancer that has spread
  • Xiaflex: Treats men with Peyronie’s disease 
  • Zemdri: Treats urinary tract infections 

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