Pharmaceutical companies will pay discounts for prices that exceed inflation

Pharmaceutical companies that raise prescription drug prices faster than the rate of inflation will pay rebates to the federal government or be fined.

The Centers for Medicare and Medicaid Services on Thursday released initial guidance for the Medicare Prescription Drug Inflation Rebate Program. Pharmaceutical companies will be required to pay discounts to the Medicare trust fund for price increases that outpace inflation on certain drugs given to people who have Medicare.

Companies that don’t pay face a civil monetary penalty of 125% of the rebate amount, CMS said.

CMS is accepting comments until March 11 and has said it will consider changes. CMS plans to release revised guidance later this year.

WHY IT IS IMPORTANT: TIMING

Beginning April 1, people with traditional Medicare and Medicare Advantage plans can pay a lower coinsurance share for certain Part B drugs that increase in price more than inflation.

In 2025, CMS intends to send the first discount invoices to pharmaceutical companies. The Medicare Prescription Drug Rebate Program will require contributions to the Medicare Trust Fund in the event of price increases that exceed inflation, especially for over-the-counter drugs, which account for 80% of all prescription drug costs.

Requiring rebates for higher-than-inflation prices on drugs already on the market could help mitigate future increases in prescription drug costs, CMS said.

As part of its initial guidance, CMS seeks public comment on the following: the process for determining the number of units of a medicine to be returned; reductions in rebate amounts for certain medicines covered by Parts B and D rebates in the event of stockouts and severe disruptions to the supply chain; the process of imposing civil monetary penalties on manufacturers of Part D returnable drugs that do not pay rebates; and ensuring the accuracy of payments for inflationary discounts.

In addition, Medicare members may pay a lower co-insurance share for certain Medicare Part B drugs. If the new prescription drug law were in place from July 2021 to July 2022, more than 1,200 prescription drugs would potentially be subject to inflationary rebates, CMS said.

BIG TREND

The guide follows an address to Congress in which President Biden spoke about the importance of lowering the cost of prescription drugs.

The guidance is also compliant with the Inflation Reduction Act, CMS administrator Chaquita Brooks-Lasur said.

“In the US, we pay two to three times as much for prescription drugs,” Brooks-Lasur said on Thursday.

It’s the first prescription drug law in the country that allows companies to pay Medicare rebates when drug prices rise faster than the rate of inflation.

The Inflation Reduction Act, passed in August 2022, allows Medicare to negotiate prices for 10 expensive drugs starting in 2026.

CMS guidance is passed as the Senate Judiciary Committee advances drug price bills.

The bipartisan bills are promoting policies to crack down on anti-competitive practices such as “product skipping”, “evergreen”, “delay fees” and fictitious citizen petitions that allow manufacturers to expand monopolies and block access to cheaper generics and biosimilars. , the prime minister said.

The Rx Sustainable Pricing Campaign is calling for full Senate passage of the Affordable Patient Prescription Act of 2023.

CSRxP Executive Director Lauren Aronson said, “We call on the full Senate to quickly pass this legislation, which will end Big Pharma’s anti-competitive tactics such as patent thickening and product skipping, which expand monopolies, block more affordable alternatives, and save drugs.” . prices are high.”

IN RECORDING

“Public feedback is critical to the successful implementation of the new drug law,” said Dr. Mina Seshamani, CMS Associate Administrator and Director of the Center for Medicare. “Technical expertise and feedback from a wide range of stakeholders are critical to our ability to strike the right balance in the application of the law while providing access to affordable and innovative treatments.”

Twitter: @SusanJMorse
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