Medicare Beneficiaries to Benefit From Lower Drug Prices
Penalties on Pharmaceutical Companies for Raising Drug Prices
Drug Companies Face Penalties for Unjustified Medicare Part B Drug Prices
The US Department of Health and Human Services (HHS) released a list of 27 drugs, whose Medicare Part B prices were raised faster than the rate of inflation, in violation of the Inflation Reduction Act. Drug companies will owe penalties, in the form of rebates paid to Medicare, that will be deposited in the Medicare Trust Fund. These penalties will be billed for 2023 and 2024 no later than fall 2025, according to a statement from the government.
Major Pharmaceutical Companies Involved
Pfizer (PFE) has five drugs listed, along with Seagen's (SGEN) Padcev. AbbVie's (ABBV) blockbuster drug, Humira, and Gilead's (GILD) Yescarta also made the list.
The impact on each company appears to be mixed. Of Pfizer's five drugs, only one accounted for $269 million in 2022 global sales revenue. AbbVie, by comparison, reported $21 billion of 2022 sales for Humira.
Medicare Beneficiaries to Benefit From Lower Prices
HHS said in a statement the drugs will also cost less for patients with Medicare or Medicare Advantage, with a lower co-insurance starting April 1 through June 30. This could save them as little as $2 or as much as $390 per average dose.
This move is part of the Biden administration's Inflation Reduction Act (IRA) which focuses on reducing costs of common drugs and penalizing drug makers for artificially raising prices. The department is also expected to hold a press briefing to discuss a list of drugs that Medicare will be negotiating prices for, a power given to them by the IRA.
Statement From HHS Secretary
"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,” said HHS Secretary Xavier Becerra in the statement Wednesday. “President Biden made lowering prescription drug costs for Americans a top priority, and we’re using every lever we have to deliver results."
The primary purpose of the Inflation Reduction Act is to reduce the costs of common drugs and to penalize pharmaceutical companies for unjustified prices. The HHS is taking the necessary steps to ensure that Medicare beneficiaries are not affected due to the abnormally high prices of drugs. The department is working to ensure that the drug manufacturing companies comply with the act, and that Americans get reduced costs on their drugs.