Medicare identifies drug makers that will owe penalties for raising prices on 27 drugs faster than rate of inflation
The U.S. Department of Health and Human Services (HHS) released a list of 27 drugs whose Medicare Part B prices were raised faster than the of rate inflation, in violation of the Inflation Reduction Act.
The drug companies will owe penalties, in the form of rebates paid to Medicare, that will be deposited in the Medicare Trust Fund, which helps pay for health services. The companies will be billed for 2023 and 2024 no later than fall 2025, according to a statement from the government.
Pfizer (PFE) has five drugs listed, along with Seagen's (SGEN) Padcev — which will soon be part of Pfizer's portfolio. AbbVie's (ABBV) blockbuster Humira — which faces competition for the first time with biosimilars this month and Gilead's (GILD) Yescarta, also made the list.
The impact on each company appears to be mixed.
Of Pfizer's five drugs, a majority are not key sources of revenue. Only one, for example, accounted for $269 million in 2022 global sales revenue. AbbVie, by comparison, reported $21 billion of 2022 sales for Humira.
Companies did not immediately return requests for comment. AbbVie and Roche's stocks were trading down in Wednesday's session, but most big pharmaceutical companies appeared not to be impacted by the news.
HHS said in a statement the drugs will also cost less for patients with Medicare or Medicare Advantage, with a lower co-insurance starting April 1 through June 30, which could save them as little as $2 or as much as $390 per average dose.
The move is part of the Biden administration's Inflation Reduction Act (IRA) which focuses on reducing costs of common drugs and penalizing drug makers for artificially raising prices. The department is also expected to hold a press briefing to discuss a list of drugs that Medicare will be negotiating prices for, a power given to them by the IRA.
“The Biden-Harris administration believes people with Medicare shouldn’t be on the hook when drug companies inexplicably jack up the prices of their drugs,” said HHS Secretary Xavier Becerra in the statement Wednesday.
“President Biden made lowering prescription drug costs for Americans a top priority, and we’re using every lever we have to deliver results," he added.
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