The Centers for Medicare and Medicaid Services said Thursday that Penalties on drug-makers in 2025: U.S. government declared. U.S. government declared that raise their Medicare program prices faster than inflation.
The agency released preliminary guidance on how it will implement a provision in President Joe Biden’s signature Inflation Reduction Act, which penalizes drugmakers for raising prices faster than inflation.
“The Medicare Prescription Drug Inflation Rebate Program would require drug companies to increase drug prices excessively in order to give Medicare rebates,” CMS Administrator Chiquita Brooks-Lasure said in a statement.
Price increasing for half of all drugs
Companies that raise prices above the rate of inflation must pay the difference to Medicare as rebates. Those who fail to pay the rebate will face a penalty equal to 125% of the rebate amount.
Medicare began examining price increases in October 2022 for Medicare Part B drugs that are often used in hospitals, complex biological drugs or drugs with only one manufacturer.
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 a price increase of more than 7.5%.
CMS said it will consider comments received by March 11 for revised guidance, which it plans to release later this year.
From April 1, consumer out-of-pocket costs will be based on inflation-adjusted drug prices
