Drug Companies Raising Prices Greater Than Inflation? US Government Mulling Imposing Fines

  • Under Joe Biden's signature Inflation Reduction Act, drugmakers for twenty-seven drugs will be penalized for charging prices that rise faster than inflation for people with disabilities or the elderly on the government's Medicare health program.
  • Price increases for over 50% of Medicare-covered drugs outpaced inflation from 2019 to 2020, averaging 1% that year. A third of those had price jumps of over 7.5%.
  • "Starting on April 1, Medicare beneficiaries will pay lower coinsurance for Part B drugs that raise prices faster than inflation," White House Domestic Policy Adviser Susan Rice told reporters.
  • People on Medicare will pay less out-of-pocket by $2 to as high as $390 per average dose starting April 1
  • Also Read: Best-Selling Drugs by Bristol Myers, Pfizer, AbbVie Likely Candidates For US Price Negotiation.
  • The list includes AbbVie Inc's ABBV arthritis drug Humira, Gilead Sciences Inc's GILD Car-T cancer therapy Yescarta and Seagen Inc's SGEN cancer therapy Padcev, Reuters reported citing White House's fact sheet.
  • Companies raising prices higher than the inflation rate will be required to pay Medicare the difference in the form of a rebate, and failing to do so will face a penalty equaling 125% of the rebate amount.
  • The government will start invoicing the companies for the rebates in 2025, but Medicare will start reducing out-pocket-costs for members in April.
  • The government will update the list of drugs each quarter.
  • Image by Tumisu from Pixaby
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