CMS Reveals List of First Drugs Subject to Inflation-Based Rebates

CMS on March 15 revealed the first drugs that will be sanctioned for having their prices increase faster than the rate of inflation, as part of the Inflation Reduction Act. The 27 medications are all covered under Medicare Part B, and many of them are treatments for cancer, chronic kidney disease and the aftereffects of organ transplants. Beneficiaries who normally pay 20% coinsurance under Part B will see their share decline based on an inflation-adjusted price for these drugs.

The federal government will invoice the manufacturers for 2023 and 2024 Part B inflation rebates no later than fall 2025, and those funds will be deposited into the Medicare Trust Fund. A Kaiser Family Foundation analysis found that, from 2019 to 2020, half of all drugs covered by Medicare had price increases above the rate of inflation over that period.

Many of the 27 drugs in the list have a high price. Average spending per beneficiary for the cancer medication Elzonris (tagraxofusp-erzs) reached nearly $410,000 in 2021. And Folotyn (pralatrexate), a treatment for patients with relapsed or refractory peripheral T-cell lymphoma, cost the Part B program over $21 million, with an average cost per beneficiary of over $140,000. According to CMS, Medicare enrollees who take one of the 27 drugs will now save between $2 and $390 per average dose, depending on their individual coverage.

NOTES: Under the medical benefit, “Covered” refers to product which is defined by the plan to be covered without restrictions. “Covered (PA/ST)” refers to product which is defined by the plan to be covered with prior authorization and/or step therapy. Under the medical benefit, the total covered lives under Medicare formularies is 50.5 million.

SOURCES: CMS. “Medicare Part B Spending by Drug,” CMS. Managed Markets Insight & Technology, LLC database as of March 2023. Evaluate Pharma.

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