President Joe Biden on Wednesday is set to announce fines on drugmakers for raising prices on some drugs faster than inflation for people on Medicare, which will lower their coinsurance payments.
Ahead of Biden’s remarks, in Las Vegas, administration officials previewed the actions that the president and his health care team have taken to lower drug costs in call with reporters Tuesday night.
The Inflation Reduction Act, which the president signed into law last year, includes prescription drug provisions that penalize pharmaceutical companies that raise prices for certain drugs faster than the rate of inflation for Medicare beneficiaries, the officials noted.
Starting next month, some Medicare beneficiaries will see lower out-of-pocket prices for 27 prescription drugs whose prices rose faster than inflation in the last quarter of 2022, the Department of Health and Human Services announced. Companies that violated the provision of the law will be required to pay Medicare a rebate to cover the difference in pricing.
Health Secretary Xavier Becerra said the list of drugs subject to rebates will be updated every quarter. Becerra also noted that the Inflation Reductio Act capped the price of insulin at $35 and “negotiates a fair price for more prescription drugs.”
“That’s going to be good news for Americans,” Becerra said on the call with reporters. “It will make certain generic drugs available for Medicare beneficiaries for a $2 copay, brings peace of mind to millions of Americans.”
Chiquita Brooks-LaSure, the administrator of the Centers for Medicare and Medicaid Services, noted that the law has begun helping Medicare beneficiaries by saving money through three free recommended vaccines and caps on insulin costs. She said the new requirement for drug companies to pay rebates to Medicare for increasing drug prices faster than inflation went into effect in October.
Brooks-LaSure said her agency will send invoices to drug companies for the rebates in 2025, but Medicare will begin deducting out-of-pocket costs for beneficiaries in April.
Health and Human Services will also release initial guidance on its drug price negotiation process, according to a White House release.
Biden’s remarks Wednesday come a week after the president outlined his budget proposals to boost Medicare funding, in which he will seek to raise a tax on the wealthy and expand the program’s ability to negotiate lower prescription drug prices.
“Medicare is more than a government program. It’s the rock-solid guarantee that Americans have counted on to be there for them when they retire,” Biden wrote in a New York Times op-ed ahead of the release of his budget proposals.
Biden wrote that his proposal will build on drug pricing reforms in the Inflation Reduction Act, strengthening Medicare’s “newly established negotiation power” by allowing it “to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch.”