The Biden administration recently announced its intention to impose inflation penalties on 64 prescription drugs for the third quarter of this year. This move is aimed at lowering costs for certain older Americans enrolled in Medicare and is part of President Joe Biden’s efforts to tackle the issue of high drug prices in the United States.
President Biden’s Inflation Reduction Act requires drugmakers to pay rebates to Medicare if they raise the price of a medication faster than the rate of inflation. This provision is separate from another aspect of the law that allows Medicare to negotiate lower drug prices with manufacturers.
The administration’s decision means that some Medicare Part B patients will pay a lower coinsurance rate for the 64 drugs covered in the announcement. Patients using these medications during the specified period can potentially save significant amounts of money. For example, some patients may save up to $4,593 per day on their drug costs.
The list of drugs subject to inflation penalties includes medications used to treat conditions such as cancer, certain infections, and osteoporosis. Among the drugs covered are Bristol Myers Squibb’s Abecma, Pfizer’s Adectris, and Astellas Pharma and Pfizer’s Padcev. These drugs are crucial for the treatment of serious illnesses such as multiple myeloma, lymphomas, and advanced bladder cancer.
Neera Tanden, White House domestic policy advisor, highlighted the importance of the Inflation Reduction Act in protecting seniors from excessive price hikes by pharmaceutical companies. The administration emphasized that, without these measures, seniors would be vulnerable to significant increases in drug prices.
The Centers for Medicare & Medicaid Services will begin sending invoices to drugmakers in 2025 for the rebates owed under the program. This process aims to hold pharmaceutical companies accountable for price increases that exceed the rate of inflation. In addition to the recent announcement, President Biden previously identified 48 drugs subject to inflation penalties for the first quarter of 2024.
The Biden administration’s decision to impose inflation penalties on prescription drugs represents a significant step in addressing the issue of high drug prices in the United States. By holding drugmakers accountable for excessive price hikes, the administration aims to reduce costs for Medicare patients and improve access to essential medications for older Americans.