CMS Unveils Guidance, Timeline for Medicare Drug Inflation Rebates

Feds want public input on key provisions, including how to impose civil monetary penalties on drugmakers.

The Centers for Medicare & Medicaid Services on Thursday made a plea for public input after unveiling a rough outline and timeframe for implementing the Medicare Prescription Drug Inflation Rebate Program.

The program, a key component of President Joe Biden's 2022 Inflation Reduction Act, slaps civil penalties on drugmakers whose prices for drugs supplied to Medicare Part B and Part D rise faster than inflation in the overall economy, particularly for brand name drugs, which CMS says make up 80% of all prescription drug spending.

The overage collected from drugmakers will be returned to the Medicare Trust Fund.

In a media availability Thursday afternoon, CMS Administrator Chiquita Brooks-LaSure says her agency is "extremely mindful of trying to implement this law, well-knowing we are under a really tight timeframe."

"That's one of the reasons why we really tried to outline where we're going to be asking for comments to give people a real sense of the opportunities for engagement," Brooks-LaSure says.

"The items that we're putting out today, the draft guidance, asking for comments, are just some of the many ways that we are engaging with all interested parties around the implementation of this act."

Brooks-LaSure says CMS will lead monthly technical calls with drugmakers to apprise them of program updates, and will also meet regularly with patient groups, providers, and other stakeholders as the policy takes shape.

"There are a variety of ways in which we are engaging because it's very important to us to hear from all interested parties and really incorporate all of the factors and expertise and experiences as we thoughtfully implement this law," she says.

Input Sought

CMS says it is seeking input from stakeholders in a number of areas, including: the process to determine the number of drug units for rebatable drugs; reduction of rebate amounts for certain Part B and Part D rebatable drugs in shortage and in cases of severe supply chain disruptions; the process to impose civil monetary penalties on manufacturers of Part D rebatable drugs that fail to pay rebates; and assuring accuracy of the inflation rebate payments. The deadline for public comments is March 11.

"Public feedback is critical to successful implementation of the new drug law," says Meena Seshamani, MD, PhD, CMS deputy administrator and director of the Center for Medicare. "Technical expertise and feedback from a wide range of interested parties is crucial for our ability to strike the right balance in implementing the law, ensuring access to affordable and innovative therapies."

A spokesperson for the Pharmaceutical Research and Manufacturers of America (PhRMA) says the drug lobby is reviewing the rough draft and is not yet ready to comment.

Senate Finance Committee Chairman Ron Wyden, D-OR, who earlier this month sent a letter to Brooks-LaSure asking for a public "when and how" update on the program, says Thursday he is "pleased to see CMS beginning this transformational Medicare policy to protect seniors from price gouging by drug companies."

"It's long past time that seniors stop footing the bill for rip offs that pad Big Pharma's profits," Wyden says. "There have never been price gouging penalties in Medicare before, and I am confident that these policies are going to deliver real savings for Americans."

"Critically, price hike rebates in Medicare Part B, which pays for drugs administered in the doctor’s office, will go straight to lowering seniors' coinsurance later this spring."

Timeline

The law took effect for Part B drugs at the start of the federal fiscal year on October 1, 2022, and for Part D drugs on January 1, 2023.

* On April 1, Medicare and Medicare Advantage enrollees may pay a lower coinsurance for some Part B drugs with prices that outstrip inflation.

* In Q4 2023 – CMS will issue revised guidance for the implementation, with timing adjusted if necessary.

* On September 30, 2025, CMS will bill drug companies for the Part B inflation rebates they owe Medicare for calendar quarters in 2023 and 2024.

* On December 31, 2025, CMS will bill drugmakers for Part D inflation rebates they owe Medicare for the 12-months between October 1, 2022 and October 1, 2023.

CMS noted that if the prescription drug law had been in effect between July 2021 to July 2022, more than 1,200 prescription drugs would have been subject to the inflation rebates.

"There is no reason Americans should have to pay two to three times more for the same drugs than people in other countries," Health and Human Services Secretary Xavier Becerra says.

"We are fighting to rein in the excessive cost of skyrocketing prescription drug prices, and now drug companies that increase their prices faster than the rate of inflation will have to pay rebates back to the Medicare Trust Fund."