Inflation Reduction Act provision will lower costs for the next quarter, saving some Medicare patients as much as $4,500 per day

MADISON, Wis. – This week the Biden administration announced that thanks to the Inflation Reduction Act, costs for 64 prescription drugs will be lowered for the next three months after drug companies raised prices faster than the rate of inflation.

In addition to capping insulin costs at $35 and allowing Medicare to negotiate for lower prescription drug prices, the Inflation Reduction Act also included a provision to penalize pharmaceutical companies who gouge consumers with excessive price hikes. Late last year, the Biden administration announced a list of 48 prescription drugs that would be subject to inflation penalties, and Medicare has continued monitoring price increases and imposing penalties each quarter.

The latest announcement means Medicare recipients will pay less for these prescription drugs over the next three months. The list includes targeted cancer treatments and other medications that hundreds of thousands of Americans depend on. According to The Centers for Medicare & Medicaid Services, some Medicare patients may save as much as $4,593 per day, depending which prescriptions they use during the quarter.

“Thanks to the Inflation Reduction Act, big pharmaceutical companies are finally being held accountable after years of corporate greed have led to skyrocketing drug prices,” said Opportunity Wisconsin Program Director Meghan Roh. “By lowering prescription drug costs, the Inflation Reduction Act is already helping millions of seniors deal with rising costs, keep more of their hard-earned money, and access the healthcare they deserve.”

CNBC: Biden administration to lower costs for 64 drugs through inflation penalties on drugmakers

The Biden administration on Wednesday said it will impose inflation penalties on 64 prescription drugs for the third quarter of this year, lowering costs for certain older Americans enrolled in Medicare. 

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It is separate from another provision under the law that allows Medicare to negotiate lower prescription drug prices with manufacturers. On average, Americans pay two to three times more than patients in other developed nations for prescription drugs, according to the Biden administration.

Some patients will pay a lower coinsurance rate for the 64 drugs covered under Wednesday’s announcement, which fall under Medicare Part B, for the period from July 1 to Sept. 30 “since each drug company raised prices faster than the rate of inflation,” according to a release from the administration.

Some Medicare Part B patients may save as much as $4,593 per day if they use those drugs during the quarter, the release added.  

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In December, Biden released a list of 48 prescription drugs that would be subject to inflation penalties during the first quarter of 2024.

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CMS Fact Sheet: Reduced Coinsurance for Certain Part B Rebatable Drugs Under theMedicare Prescription Drug Inflation Rebate Program

President Biden’s historic Inflation Reduction Act requires drug companies to pay rebates to Medicare when prescription drug prices increase faster than the rate of inflation for certain drugs furnished to people with Medicare. This new inflation rebate applies to Medicare Part B rebatable drugs, which are single source drugs and biological products, including certain biosimilar biological products, beginning January 1, 2023.

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For the time period of July 1 – September 30, 64 Part B rebatable drugs in 65 Healthcare Common Procedure Coding System (HCPCS) codes have an adjusted coinsurance rate based on the inflation-adjusted payment amount. People with Traditional Medicare and Medicare Advantage who use these drugs may, depending on other health coverage they may have, pay a reduced amount for their coinsurance during this specific quarter. For the quarter, July 1 –
September 30, people with Medicare may experience coinsurance amounts that are lower than what they would have paid before the new law passed by as much as $1-$4,593 per day.

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