Medicare Imposes Savings on 54 Drugs Exceeding Inflation Rate (1)

Drugmakers Johnson & Johnson, Bristol Myers Squibb Co., and Amgen could be forced to pay rebates to Medicare if they raise the price of their drugs to treat cancer, osteoporosis, and more faster than inflation beginning in October.

The US Department of Health and Human Services on Monday announced that some Medicare enrollees will pay a lower coinsurance rate for 54 drugs administered in doctor’s offices and hospitals between Oct. 1 and Dec. 31.

The announcement is the latest effort in the government’s Medicare Prescription Drug Inflation Rebate Program, which requires drug companies to pay rebates to the Centers for Medicare & Medicaid Services when prices for certain drugs increase faster than the rate of inflation.

Some of the drugs on list included Johnson & Johnson’s Rybrevant, Bristol Myers Squbb’s Abecma, Astella Pharma Inc.'s Cresemba, and Amgen’s Evenity.

“The President’s lower cost prescription drug law continues to put money back in the pockets of seniors and people with disabilities,” HHS Secretary Xavier Becerra said in a statement. “President Biden and Vice President Harris promised to lower prescription drug costs—and they have delivered.”

President Joe Biden in a statement Monday touted the rebate plan created under his landmark Inflation Reduction Act, which includes various provisions targeting high drug prices.

“While Big Pharma made record profits, Americans footed the bill for the industry’s price hikes. Not anymore,” Biden said. “Thanks to my Inflation Reduction Act, companies that increase the price of prescription drugs faster than inflation now must provide a rebate to Medicare.”

More than 822,000 Medicare enrollees use these drugs annually, according to the HHS. Since April 1, 2023, people with Medicare have seen savings on over 100 drugs under the rebate program.

The CMS intends to begin invoicing prescription drug companies for rebates owed to Medicare no later than fall 2025, according to an agency statement.

The rebate plan is also part of other Inflation Reduction Act prescription drug provisions.

The Biden administration in August announced it reached agreements with drug manufacturers for 10 drugs selected under the first round of the Medicare Drug Price Negotiation program.

Under that plan, the government for the first time can negotiate drug prices with manufacturers and set the costs for some of the most expensive and widely used drugs covered under Medicare.

The government touts that once prices take effect in 2026, people with Medicare Part D are expected to save an estimated $1.5 billion in total out-of-pocket costs.

In addition to the drug price negotiations, all Medicare Part D beneficiaries beginning in January 2025 will benefit from a $2,000 cap on annual out-of-pocket prescription drug costs.