A special provision will be added to the Inflation Reduction Act that will penalize pharmaceutical drug makers for hiking prices faster than inflation|Smuconlaw|CC BY-SA 4.0
Starting in 2025, drug companies increasing prices higher than the rate of inflation will be required to rebate the difference to Medicare and failure to do so will result in penalties.
The Centers for Medicare & Medicaid Services said Thursday that a special provision will be added to the Inflation Reduction Act that will penalize pharmaceutical drug makers for hiking prices faster than inflation.
Why?
In October 2022, Medicare started examining the price increase in Medicare Part B drugs and quickly noticed:
- Half of the drugs examined had price jumps of over 7.5% from 2019 to 2020
- The inflation during this time averaged around only 1%
Failure to rebate drug price differences to Medicare will cost drug makers fines of up to 125% of the rebate amount.