Some beneficiaries of Medicare could start paying less for 27 prescription drugs from next month as their prices have exceeded the rate of inflation.
“Today, the Department of Health and Human Services [HHS], through the Centers for Medicare & Medicaid Services (CMS), announced 27 prescription drugs for which Part B beneficiary coinsurances may be lower from April 1—June 30, 2023,” said a March 15 CMS press release. “Some people with Medicare who take these drugs may save between $2 and $390 per average dose starting April 1, depending on their individual coverage.”
The move is part of the Inflation Reduction Act (IRA) of 2022 containing provisions to lower the cost of health insurance, which includes bringing down Medicare prescription drug costs.
According to the act, pharma companies need to pay a rebate to the Medicare program when prices of their drugs rise at a faster rate than inflation.
Drug Pricing and Inflation
According to 46brooklyn Research, a drug pricing nonprofit, pharma companies raised the prices of 1,400 drugs in 2022, the biggest increase since 2015. The median drug price increase was 4.9 percent, with the average price increase at 6.4 percent. Both increases were lower than the 2022 inflation rate.Antonio Ciaccia, president of health care research firm 3 Axis Advisors, believes that the IRA’s provisions regarding drug pricing and inflation could create a complicated pricing situation for manufacturers.
In addition, 23 out of the top 25 Part D drugs and 16 out of the top 25 Part B drugs saw prices rise above inflation between 2019 and 2020.
IRA Drug Price Negotiation
In addition to rebates, the IRA also carries a provision on drug price negotiation. Last month, three congressional Republican leaders wrote a letter to Becerra and CMS Administrator Chiquita Brooks-LaSure, raising concerns about the $3 billion set aside for this program.In a September 2022 letter to Becerra and Brooks-LaSure, 25 GOP senators cited an analysis by the Congressional Budget Office, according to which government drug price controls under the IRA could raise launch prices for new medications and decrease the number of new drug approvals.
Some drug manufacturers may also opt to terminate their participation in Medicare and Medicaid owing to the “compulsory” price-setting program. This would jeopardize access to a range of cures and therapies, the letter stated.