CMS releases timeline for inflation rebate on drug price increases

On Thursday, the Centers for Medicare & Medicaid Services (CMS) released its proposed timeline for penalizing drug makers whose prices rise faster than inflation.

“As part of President Biden’s historic Inflation Reduction Act, the nation’s new prescription drug law, for the first time ever, drug companies will pay rebates to Medicare when their prescription drug prices increase faster than the rate of inflation for certain drugs dispensed to people with Medicare,” said the CMS announcement.

The plan covers drug price increases for certain drugs from October 1, 2022. The rebates would be due in 2025.

The agency is requesting stakeholder comments on certain aspects of the plan by March 11.

“With today’s guidance, we are continuing to implement the Inflation Reduction Act, which lowers out-of-pocket drug costs for people with Medicare and improves the sustainability of the Medicare program for current and future generations,” said CMS Administrator Chiquita Brooks-LaSure. “The Medicare Prescription Drug Inflation Rebate Program will require drug companies with excessive increases in drug prices to pay rebates to Medicare.”

The implementation timeline

CMS released a fact sheet detailing the timeline. Some key dates include:

  • October 1, 2022: The start of the first 12-month period for which drug companies would be required to pay rebates if prices for certain Medicare Part D drugs increase faster than the rate of inflation.
  • January 1, 2023: The start of the first quarter for which companies will be required to pay Medicare Part B inflation rebates.
  • Q4 2023: Revised guidance on the program will be issued.
  • September 30, 2025: CMS must invoice drug companies by this date for Medicare Part B inflation rebates assessed in 2023 and 2024.
  • December 31, 2025: CMS must invoice drug companies by this date for Medicare Part D inflation rebates assessed in 2022 and 2023.

According to CMS, “If the new prescription drug law had been in place from July 2021 to July 2022, more than 1,200 prescription drugs potentially would have been subject to the inflation rebates.”

At the Biotechnology Innovation Organization (BIO) CEO and Investor Conference earlier in the week, several biotech CEOs and policy experts said we’re already seeing the impacts of these price controls—and, in fact, companies began changing their investment decisions back in the summer, before the law went into effect.

It’s “much more of a rate-setting approach and not a negotiation,” said Chris Mancill, SVP & Head of Worldwide Value Access & Payment and Health Economics and Outcomes Research at Bristol Myers Squibb Company.

About The Author

Scroll to Top