Biden will reduce some drug costs through inflationary sanctions

The Biden administration said Wednesday it will impose inflation penalties on 64 prescription drugs during the third quarter of this year, reducing costs for certain older Americans enrolled in Medicare.

President Joe Biden has made lowering U.S. drug prices a key pillar of his health care agenda and 2024 reelection platform. A provision of Biden’s Inflation Reduction Act requires drugmakers to pay rebates to Medicare, the federal health care program for Americans 65 and older, if they raise the price of a drug faster than the rate of inflation.

This is a separate provision of another law that allows Medicare to negotiate lower prescription drug prices with manufacturers. On average, Americans pay two to three times more than patients in other developed countries for prescription drugs, according to the Biden administration.

Some patients will pay a lower coinsurance rate for the 64 drugs covered under Wednesday's announcement, which are included in Medicare Part B, for the period July 1 to Sept. 30 “as each drug company raised prices faster than the rate of inflation,” according to an administration release.

Some Medicare Part B patients can save up to $4,593 per day by using those medications during the quarter, the release added.

According to the release, more than 750,000 Medicare patients use these drugs each year to treat diseases such as cancer, certain infections and a bone disease called osteoporosis.

“Without the Inflation Reduction Act, seniors were completely exposed to Big Pharma's price increases. Not anymore,” Neera Tanden, a White House domestic policy adviser, said in the statement.

The Centers for Medicare and Medicaid Services plans to send the first bills to drug makers in 2025 for rebates owed to the program.

In December, Biden released a list of 48 prescription drugs that would be subject to inflation penalties during the first quarter of 2024.