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48 Medicare Drugs With Price Increases Above Inflation Face Penalties

Beneficiaries will see lower coinsurance for these Part B medications

The names of 48 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 Dec. 14, the fourth set of medications the agency has identified. Starting Jan. 1, 2024, 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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“Today's announcement is just another step in that direction of lowering the cost of prescription medication for millions and millions of people,” Health and Human Services Secretary Xavier Becerra told AARP in an interview. “We know Americans are being asked to pay way too much for life-saving medication. So now drug companies have to rebate back to the Medicare program the extra that they charge the Medicare program for those drugs that went to all those Medicare recipients.”

Drug companies won’t have to pay the rebates for these 48 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.

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“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.”

These 48 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 has not yet identified which medications paid for under the Part D prescription drug benefit will be subject to a rebate. Part D medications are generally taken by patients in pill form and represent the majority of prescription drugs used by Medicare enrollees. CMS has until 2025 to identify which Part D medications will be subject to a rebate.

 According to CMS, Medicare enrollees who need one of the 48 Part B drugs identified could save between $1 and $2,786 per average dose of these medicines between Jan. 1 and March 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.

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Many of the drugs included in this list of 48 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.

“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 Medicare Part B drug 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. 

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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. 

“To the extent that prices 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. 

Prescription drugs subject to rebate

These 48 prescription drugs will be subject to a rebate to Medicare from Jan. 1, 2024 to March 31, 2024

  • Abelcet: Treats serious fungal infection
  • Adcetris: Treats Hodgkin’s lymphoma
  • Akynzeo: Prevents chemotherapy-induced nausea and vomiting
  • Atgam: Keeps the body from rejecting the kidney/aplastic anemia after a kidney transplant 
  • Argatroban (Auromedics): Treats a complication of heparin therapy
  • Aveed: Testosterone replacement therapy
  • Bicillin C-R: Treats bacterial infections 
  • Bicillin L-A: Treats syphilis and upper respiratory tract infections 
  • Blincyto: Treats leukemia
  • Bortezomib (Dr. Reddy's): Treats multiple myeloma
  • Bortezomib (Fresenius Kabi): Treats multiple myeloma
  • Cefepime (B. Braun): Treats bacterial infections
  • Cefepime (Baxter): Treats bacterial infections
  • Chirhostim: Used to diagnose pancreas function
  • Crysvita: Treats X-linked hypophosphatemia, a hereditary blood disorder
  • Cytogam: Prevents viral infections in organ transplant recipients
  • Envarsus XR: Prevents organ rejection after kidney transplant
  • Fosaprepitant (Teva): Treats side effects of chemotherapy
  • Fragmin: Treats blood clots 
  • Fulvestrant (Fresenius Kabi): Hormone therapy
  • Gamastan: Protects against viral infections
  • Gemcitabine (Accord): Chemotherapy for advanced breast, lung, ovarian and pancreatic cancer
  • Hypertet: Prevents tetanus
  • Imlygic: Treats melanoma (skin cancer)
  • Imogam Rabies-HT: Used to prevent rabies
  • Kymriah: Treats acute lymphoblastic leukemia
  • Leukine: Lowers the risk of infection after chemotherapy
  • Lupron Depot-PED: Treats central precocious puberty in children.
  • Meropenem (B. Braun): Treats bacterial infections
  • Minocin: Treats bacterial infections 
  • Oncaspar: Treats acute lymphoblastic leukemia
  • Padcev: Treats advanced urothelial cancer 
  • Panhematin: Treats blood disorders
  • Pemetrexed: Treats lung cancer
  • Prolia: Treats osteoporosis in post-menopausal women
  • Romidepsin: Treats T-cell lymphoma
  • Signifor LAR: Treats Cushing’s disease
  • Sotalol: Treats life-threatening heart rhythm problems
  • Sylvant: Treats Castleman disease
  • Synribo: Treats leukemia
  • Thrombate III: Treats antithrombin III deficiency
  • Tigan: Treats post-surgery nausea and vomiting
  • Vabomere: Treats complicated urinary tract infections
  • Vancomycin (Xellia): Treats bacterial infections
  • Varizig: Treats post chickenpox exposure in high-risk individuals
  • Vectibix: Treats colorectal cancer that has spread
  • Xiaflex: Treats men with Peyronie’s disease
  • Zemdri: Treats urinary tract infections

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