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27 Medicare Drugs With Price Hikes Above Inflation Face Penalties

Beneficiaries will see lower coinsurance for these Part B medications

The names of 27 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 March 15. Starting April 1, beneficiaries could pay less out of their pockets for these 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 27 medicines until 2025, but starting April 1, 2023, the 20 percent coinsurance that consumers are charged will be calculated based on what the price would have been if any price hike had been held to the inflation rate.

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

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 27 Part B drugs identified could save between $2 and $390 per average dose of these medicines. 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 27 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. The average cost of another cancer drug, Elzonris, was nearly $410,000 per beneficiary in 2021.

“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 may 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 (HSS) shows. The average price increase for these drugs was 31.6 percent. This HHS 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. 

“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 27 prescription drugs will be the first Part B medications subject to a rebate to Medicare:

  • Abelcet: Treats fungal infections
  • Akynzeo: Prevents chemotherapy-induced nausea and vomiting
  • Atgam: Keeps the body from rejecting the kidney after a transplant and treats aplastic anemia
  • Aveed: Treats men with low or no testosterone and certain types of breast cancer
  • Bicillin C-R: Treats bacterial infections
  • Bicillin L-A: Treats syphilis and upper respiratory tract infections
  • Carnitor: Treats carnitine deficiency
  • Cytogam: Prevents serious viral infections after an organ transplant
  • Elzonris: An anti-cancer medication
  • Fetroja: Treats complicated urinary tract infections
  • Flebogamma DIF: Treats immunodeficiency
  • Folotyn: Treats T-cell lymphoma
  • Fragmin: An anticoagulant that treats blood clots
  • Humira: Reduces severe rheumatoid arthritis
  • Leukine: Lowers the risk of infection after chemotherapy
  • Minocin: Treats bacterial infections
  • Mircera: Treats anemia associated with chronic kidney disease
  • Nipent: Treats cancer, including hairy cell leukemia
  • Padcev: Treats advanced urothelial cancer
  • Rybrevant: Treats advanced lung cancer
  • Signifor LAR: Treats Cushing’s disease
  • Sylvant: Treats rare multicentric Castleman’s disease
  • Tecartus: Treats mantle cell lymphoma or acute lymphoblastic leukemia
  • Winrho SDF: Treats a bleeding disorder called ITP
  • Xiaflex: Treats men with Peyronie’s disease
  • Xipere: Treats macular edema for the eye disease uveitis
  • Yescarta: Treats non-Hodgkin lymphoma

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