Dozens of pharmaceutical companies have raised prices at a rate faster than inflation and will have to pay rebates to Medicare, the U.S. Department of Health and Human Services announced Thursday. The refunds are due under a provision of the Inflation Reduction Act, which penalizes companies if their prices exceed inflation.
“In the year before we passed this legislation, drug companies were driving up prices at nearly four times the rate of inflation — and they were already too high,” President Joe Biden said, speaking about his administration's announcement at a National Institutes lab of Health. in Bethesda, Maryland on Thursday. “Let's call this out for what it is: it's a rip-off.”
In the last three months of 2023, the Biden administration said 48 Medicare Part B drugs caused prices to rise faster than inflation. This year, another 16 drugs did this every quarter. According to HHS, more than 750,000 Americans received at least one drug that exceeded inflation.
“Folks, it's wrong,” the president declared. He said seniors have had to skip doses of medications, cut pills in half and forego prescriptions entirely because they can't afford drug prices.
The 48 new drugs on the HHS list will save seniors up to $700 per dose on expensive cancer drugs, the department estimates.
White House domestic policy adviser Neera Tanden cited the drug for an endocrine condition that costs nearly $3,600 per dose, with patients paying 20%, or $720 out of pocket. Under the new IRA rule, the inflation-adjusted copayment would be reduced to $311 per dose, she said.
“For too long, Americans have paid more for prescription drugs than any developed country in the world,” Biden said.
The National Institutes of Health has the largest drug research budget in the world. Funded with taxpayer dollars, the NIH spends billions of dollars on research to help discover and develop new prescription drugs. According to the Congressional Research Service, the NIH budget for fiscal year 2023 is $49 billion.
Seven of the 10 drugs the Biden administration has entered into Medicare price negotiations this year have received at least one form of federal support that helped bring the drug to market, Tanden said.
“After all these years, we finally defeated the pharmaceutical industry when I signed the inflation relief bill to give seniors and taxpayers a better deal,” Biden declared Thursday.
On Thursday, HHS also released new data on the 10 drugs it selected for the Medicare price negotiations. Medicare spending on the drugs, which represents more than half of the total out-of-pocket spending of Part D health insurance program participants, more than doubled between 2018 and 2022. The rate was three times that of all Part D drugs during the same period. time frame.
HHS's Administration for Strategic Preparedness and Response announced Thursday that it is making fair pricing a standard part of contract negotiations for medical products the government helped develop or purchased.
“American consumers will no longer pay an amount significantly higher than people in Toronto, London or Paris,” Tanden said.
HHS has included fair pricing in three recent agreements with the companies making the new COVID-19 vaccines, a senior administration official said.
Maddie Gannon of Spectrum News contributed to this report
