CMS Leaves Important Questions Unanswered in Inflation Rebate Guidance

February 23

The Biden administration on Feb. 9 released the first round of guidance regarding the Medicare prescription drug inflation rebate program that’s included in the Inflation Reduction Act (IRA), which requires drugmakers to pay rebates to Medicare if they raise the price of drugs faster than the rate of inflation. One expert tells AIS Health, a division of MMIT, that the rebates should have minimal effects, if any, on premiums for Medicare Advantage (MA) plans with prescription drug coverage and stand-alone Prescription Drug Plans (PDPs), given the information that is currently available — although she observes that drugmakers may try to recoup their losses through more aggressive commercial plan rebate strategies.

The rebate program has already begun to phase in: Medicare prescription drug transactions starting in October 2022 are subject to rebates for both Part B and Part D drugs. However, CMS has yet to produce the regulations that will govern the rebate process.

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Radar on Drug Benefits

Peter Johnson

Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.