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ROUNDUP: “Landmark” Inflation Reduction Act Provision to Stop Drug Company Price Hikes Kicks In

By October 6, 2022No Comments

Help Is on The Way as Critical Drug Pricing Provision Takes Effect 

Last week, the first health care provision in the Inflation Reduction Act took effect, an important step to deliver lower costs to millions of Americans. As of October 1, 2022, drug companies will now be charged a penalty when they raise drug prices faster than the rate of inflation. News coverage makes clear that this provision marks a turning point in the drug pricing landscape, subjecting drug companies to steep penalties if they hike the price of lifesaving drugs. Along with the provisions to give Medicare the power to negotiate, cap seniors’ out-of-pocket costs, and drive down premium costs, the Inflation Reduction Act is set to make health care more affordable, accessible, and equitable for the American people. 


Forbes: HHS Begins Implementation of Inflation Rebates for Medicare Part D Drugs. “On October 1st, the Department of Health and Human Services (HHS) began implementing one of three main prescription drug pricing provisions contained in the Inflation Reduction Act. The Department of HHS now requires that drug manufacturers pay the Centers for Medicare and Medicaid Services (CMS) rebates for raising list prices of outpatient drugs for Medicare in excess of inflation. Any difference between the inflation percentage in a given year and the increase in price above inflation must be rebated to Medicare.” [Forbes, 10/5/22]

Bloomberg Law: Inflation Rebates Explained. “Makers of some of the highest-cost medications could start seeing Medicare rebate invoices as a provision of the Biden administration’s landmark drug pricing law takes effect. As of Oct. 1, the Centers for Medicare & Medicaid Services will measure price increases for prescription drugs covered by Medicare Part D. Any increases exceeding the rate of inflation over the next 12 months will be subject to payments. w.” [Bloomberg Law, 10/4/22]

Endpoints News: New Inflation Rebates Program Going Into Effect on Saturday. “The new rebates are part of the newly signed Inflation Reduction Act, which introduces this new requirement that manufacturers pay rebates to Medicare for Part D drugs whose price increases exceed inflation, and in January 2023, the same will occur with Part B drugs. The rebate system ‘was designed to reduce the frequency and size of drug price increases,’ HHS says. The IRA also includes a provision that allows CMS to negotiate and/or cap the prices of 10 of the most expensive drugs. While those negotiations will be limited, the rebates paid by the industry may be significant.” [Endpoints News, 9/30/22]


Senate Finance Committee Chair Ron Wyden Hails Introduction of Rebates. “Starting this week, there is finally accountability for Big Pharma’s indiscriminate price gouging. Seniors and taxpayers shouldn’t be forced to foot the bill while Big Pharma raises prices faster than the cost of living every year. This step is just the beginning of a seismic shift in the relationship between Big Pharma and taxpayers.” [10/6/22]

Statement From HHS Secretary Xavier Becerra. “Today’s action marks a critical step toward reducing health care costs for American families and increasing competition. We’re moving full-speed ahead on Inflation Reduction Act implementation to deliver results for millions of Americans.” [10/3/22]

Statement From CMS Administrator Chiquita Brooks-LaSure. “CMS is swiftly implementing the historic Inflation Reduction Act to make the new law and the benefits it provides a reality for the people we serve. The temporary Medicare Part B payment increase for qualifying biosimilars that is now in effect will foster competition in the drug marketplace for conditions such as diabetes, cancer, and immune disorders, and will improve access to these life-saving medicines that help keep people with Medicare healthy.” [10/3/22]

White House Press Secretary Kevin Munoz on the New Rebates. “Important HHS report showing prices of 1,200 drugs rose faster than inflation. The Inflation Reduction Act requires companies to pay rebates to Medicare if prices rise beyond the rate of inflation. GOP wants to repeal the Inflation Reduction Act.” [9/30/22]