One of the many goals of the Inflation Reduction Act (IRA) is to reduce prescription drug costs for millions of American seniors and their families. This is already being accomplished in a variety of ways such as, capping insulin costs to $35/month, expanding free vaccine coverage, lowering costs by requiring Medicare to negotiate drug prices and more. Another tool is the Medicare Prescription Drug Inflation Rebate Program. By reducing coinsurance for some people with Part B coverage and discouraging drug companies from increasing prices faster than inflation, this policy will lower out-of-pocket costs for some people with Medicare and reduce Medicare program spending for costly drugs.
The Medicare Prescription Drug Rebate Program requires drug companies to pay rebates to Medicare when prescription drug prices increase faster than the rate of inflation for certain drugs furnished to people with Medicare. This new inflation rebate applies to Medicare Part B rebatable drugs, which are single source drugs and biological products, including certain biosimilar biological products, beginning January 1, 2023.
As of April 1, 2023, people with Medicare may have started seeing lower out-of-pocket costs for certain Part B drugs and biologicals with prices that have increased faster than the rate of inflation. For these drugs and biologicals, the beneficiary coinsurance is 20% of the inflation-adjusted payment amount, which is less than what a beneficiary would pay in coinsurance otherwise.
As drug prices and inflation rates change, the Centers for Medicare and Medicaid Services (CMS) updates their list of drugs with new inflation rebates each quarter. Therefore, the drugs on the list can change every 3 months. CMS recently published the list of 34 drugs with adjusted coinsurance amounts for the quarter October 1 – December 31, 2023.
People with Original Medicare and Medicare Advantage who use these drugs may, depending on other health coverage they may have, pay a reduced amount for their coinsurance during this specific quarter. They may save anywhere from $1-$618 per dose thanks to the new law. This is great news.
For more information, see CMS’ fact sheet: Medicare Prescription Drug Inflation Rebate Program Part B Rebatable Drug Coinsurance Reduction.