US government announces first set of drugs subject to Medicare inflation rebates

The US government has announced the first set of drugs that will be subject to penalties because their prices rose faster than the rate of inflation, a move set to reduce out-of-pocket costs for certain Medicare beneficiaries by up to $390 per dose.

The 27 products, which all fall under Medicare Part B, include Gilead Sciences’ blood cancer therapies Yescarta and Tecartus, AbbVie’s immunology drug Humira, Seagen’s Padcev for bladder cancer and Roche’s lung cancer therapy Rybrevant.

Five of Pfizer’s drugs are also listed, including the blood thinner Fragmin, Atgam for allograft rejection in renal transplant patients, chemotherapy Nipent, and antibacterial drugs Bicillin L-A and Bicillin C-R.

A penalty equivalent to 125% of the rebate amount will be given to those that fail to pay, with the first demands for payment due to go out in 2025.

Eligible Medicare recipients will be able to start paying the lower coinsurance amount next month.

The announcement comes as a result of President Biden’s Inflation Reduction Act, which requires drug companies to pay rebates to Medicare when their prices increase faster than the rate of inflation.

US Department of Health and Human Services secretary, Xavier Becerra, said: “The Biden-Harris administration believes people with Medicare shouldn’t be on the hook when drug companies inexplicably jack up the prices of their drugs.

“President Biden made lowering prescription drug costs for Americans a top priority and we’re using every lever we have to deliver results. With the inflation rebate programme, we are fighting to ensure seniors can afford the treatments they need, taxpayers aren’t subsidising drug company excess prices, and the Medicare programme is strong for millions of beneficiaries now and in the future.”

Tackling the high costs of prescription drugs and increasing access to novel therapies has been a key focus of the current US government.

Last month, the US health department proposed three new models to help promote accessibility and improve quality of care for those enrolled in voluntary government health insurance plans.

Included in the proposals is a model encouraging the Medicare Part D plans, which cover the cost of most prescriptions, to offer a monthly $2 fixed co-payment for commonly used generic drugs for chronic conditions, such as high blood pressure.