CMS announces new Medicare Part B drug inflation rebates
CMS has announced its initial guidance for the new Medicare Prescription Drug Inflation Rebate Program, which it said will reduce drug costs for millions of beneficiaries.
On Jan. 1, the Inflation Reduction Act began requiring drug companies to pay Medicare a rebate if they raised their prices for certain Medicare Part B drugs faster than the rate of inflation, according to a CMS press release. Beginning April 1, beneficiary coinsurance for some Part B drugs will be based on a lower, inflation-adjusted payment amount, rather than the prices that increased faster than inflation.
The change will apply to specific Medicare Part B biological products, including biosimilar biological products and single source drugs, according to CMS. The agency said will begin collecting the rebates in 2025.
The program, which was authorized under the Inflation Reduction Act, “will lead to a stronger Medicare program for current and future enrollees and discourage runaway price increases by drug companies,” according to a CMS fact sheet on the initial guidance. The agency also noted “the rebates paid by drug companies will be deposited in the Federal Supplementary Medical Insurance Trust Fund.”
“With today’s guidance, we are continuing to implement the Inflation Reduction Act, which lowers out-of-pocket drug costs for people with Medicare and improves the sustainability of the Medicare program for current and future generations,” CMS Administrator Chiquita Brooks-LaSure said in the release. “The Medicare Prescription Drug Inflation Rebate Program will require drug companies with excessive increases in drug prices to pay rebates to Medicare.”
According to the release, more than 1,200 prescription drugs would possibly have been subject to the rebates if the Inflation Reduction Act had been in place from July 2021 to July 2022.
Public comment on the guidance is open until March 11, and there will likely be a revised guidance later in the year for the Medicare Prescription Drug Inflation Rebate Program.
“Public feedback is critical to successful implementation of the new drug law,” Meena Seshamani, MD, PhD, CMS deputy administrator and director of the Center for Medicare, said in the release. “Technical expertise and feedback from a wide range of interested parties is crucial for our ability to strike the right balance in implementing the law, ensuring access to affordable and innovative therapies.”
According to the release, CMS is looking for input on key topics, like ensuring accuracy of the inflation rebate payments, the process to determine the number of drug units for rebatable drugs, the process to impose penalties on those who manufacture Part D relatable drugs that do not pay rebates and, in the case of severe supply chain disruptions or shortages, the reduction of rebate amounts for certain Part B and Part D rebatable drugs in shortage.
References:
- Fact Sheet: Medicare prescription drug inflation rebate program initial guidance. https://www.cms.gov/files/document/inflation-rebate-fact-sheet-february-2023.pdf. Accessed Feb. 13, 2023.
- HHS releases initial guidance for Medicare Prescription Drug Inflation Rebate Program. https://www.cms.gov/newsroom/press-releases/hhs-releases-initial-guidance-medicare-prescription-drug-inflation-rebate-program. Published Feb. 9, 2023. Accessed Feb. 13, 2023.
- Medicare Part B drug inflation rebates. https://www.cms.gov/outreach-and-education/outreach/ffsprovpartprog/provider-partnership-email-archive/2023-02-09-oce. Accessed Feb. 13, 2023.