WASHINGTON/LAS VEGAS: US President Joe Biden said Wednesday that his administration would impose inflation penalties on 27 drugs, a move that would reduce out-of-pocket costs. Treatment more than $390 per dose to recipients, and he pledged that more drug price cuts are coming.
Drug makers increased the prices of 27 drugs by more than the rate of inflation last quarter, and the difference for those drugs must be paid by Medicare, the government healthcare program for people 65 and older and with disabilities.
“It’s going to change the way drugs are priced, lower the cost for seniors long term,” Biden said in Las Vegas.
People may be surprised, Biden said, that companies including Eli Lilly and Co have reduced the out-of-pocket cost for insulin at $35 a month, following his public plea for lower prices for diabetes treatment. given, but “much more to come.”
The Inflation Reduction Act (IRA), signed by the president, includes a provision to penalize drug makers for charging people on Medicare prices that rise faster than inflation.
“Starting April 1, Medicare beneficiaries will pay less coinsurance for Part B drugs that raise prices faster than inflation,” said a White House domestic policy adviser. Susan Rice told reporters on a press call ahead of Biden’s speech.
Rice said the Department of Health and Human Services (HHS) on Wednesday issued preliminary guidance on how it would conduct its Medicare prescription drug pricing negotiation process, another key IRA provision aimed at lowering drug costs.
The drugs that are being charged with inflation penalties include AbbVie’s blockbuster arthritis drug Humira, Gilead Sciences Inc’s Car-T cancer therapy Yescarta and Cezen Inc’s targeted cancer therapy PadSave, the White House said in a fact sheet.
pfizer Inc had five drugs on the list, while Gilead, Endo International Plc, Kamada Ltd and Ledient Biosciences had two drugs each. Johnson & Johnson and Roche had one each.
Shares of most of the named drugmakers closed near flat, while Pfizer ended regular trading up about 1%.
The outstanding payment to Medicare will be in the form of a discount. Those who fail to pay the exemption will face a penalty equal to 125% of the exemption amount.
The government will begin invoicing companies for the rebate in 2025, but Medicare will begin reducing out-of-pocket-costs for members in April.
Wells Fargo analyst Mohit Bansal said in a research note that the direct impact on drugmakers seems small for now.
However, the announcement “is a sign of the government signaling to the industry that it is serious about stopping drug price increases. We suspect companies may become more wary about raising their prices because of this,” he said.
Medicare will begin examining price increases in October 2022 for Medicare Part B drugs that are often used in a hospital, that are complex biologic drugs or with only one manufacturer.
The government will update the list of medicines every quarter.
Price increases for half of all drugs covered by Medicare from 2019 to 2020 exceeded inflation, averaging 1% that year. A third of them had increased prices by more than 7.5%.
Drug makers increased the prices of 27 drugs by more than the rate of inflation last quarter, and the difference for those drugs must be paid by Medicare, the government healthcare program for people 65 and older and with disabilities.
“It’s going to change the way drugs are priced, lower the cost for seniors long term,” Biden said in Las Vegas.
People may be surprised, Biden said, that companies including Eli Lilly and Co have reduced the out-of-pocket cost for insulin at $35 a month, following his public plea for lower prices for diabetes treatment. given, but “much more to come.”
The Inflation Reduction Act (IRA), signed by the president, includes a provision to penalize drug makers for charging people on Medicare prices that rise faster than inflation.
“Starting April 1, Medicare beneficiaries will pay less coinsurance for Part B drugs that raise prices faster than inflation,” said a White House domestic policy adviser. Susan Rice told reporters on a press call ahead of Biden’s speech.
Rice said the Department of Health and Human Services (HHS) on Wednesday issued preliminary guidance on how it would conduct its Medicare prescription drug pricing negotiation process, another key IRA provision aimed at lowering drug costs.
The drugs that are being charged with inflation penalties include AbbVie’s blockbuster arthritis drug Humira, Gilead Sciences Inc’s Car-T cancer therapy Yescarta and Cezen Inc’s targeted cancer therapy PadSave, the White House said in a fact sheet.
pfizer Inc had five drugs on the list, while Gilead, Endo International Plc, Kamada Ltd and Ledient Biosciences had two drugs each. Johnson & Johnson and Roche had one each.
Shares of most of the named drugmakers closed near flat, while Pfizer ended regular trading up about 1%.
The outstanding payment to Medicare will be in the form of a discount. Those who fail to pay the exemption will face a penalty equal to 125% of the exemption amount.
The government will begin invoicing companies for the rebate in 2025, but Medicare will begin reducing out-of-pocket-costs for members in April.
Wells Fargo analyst Mohit Bansal said in a research note that the direct impact on drugmakers seems small for now.
However, the announcement “is a sign of the government signaling to the industry that it is serious about stopping drug price increases. We suspect companies may become more wary about raising their prices because of this,” he said.
Medicare will begin examining price increases in October 2022 for Medicare Part B drugs that are often used in a hospital, that are complex biologic drugs or with only one manufacturer.
The government will update the list of medicines every quarter.
Price increases for half of all drugs covered by Medicare from 2019 to 2020 exceeded inflation, averaging 1% that year. A third of them had increased prices by more than 7.5%.
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