{"id":8825,"date":"2024-12-05T16:18:32","date_gmt":"2024-12-05T21:18:32","guid":{"rendered":"https:\/\/www.appliedpolicy.com\/staging\/7403\/?p=8825"},"modified":"2024-12-06T00:17:21","modified_gmt":"2024-12-06T05:17:21","slug":"ira-inflation-rebates-2024-in-review","status":"publish","type":"post","link":"https:\/\/www.appliedpolicy.com\/staging\/7403\/ira-inflation-rebates-2024-in-review\/","title":{"rendered":"IRA Inflation Rebates: 2024 in Review"},"content":{"rendered":"

Signed into law in April 2022, the Inflation Reduction Act (IRA<\/a>) represents a key step in the U.S. government’s efforts to reduce prescription drug costs, particularly for Medicare beneficiaries. A central provision of the IRA requires drug manufacturers to pay rebates to the federal government if they raise the prices of certain eligible Medicare Part B and Part D drugs faster than the rate of inflation, as measured by the Consumer Price Index for All Urban Consumers (CPI-U<\/a>). By imposing these rebates, the IRA aims to curb excessive price increases and ease the financial burden on Medicare patients.<\/p>\n

How Inflation Rebates Work<\/strong><\/p>\n

To determine if a drug is subject to an inflation rebate, price changes are measured using the average sales price (ASP) for Part B drugs and the average manufacturer price (AMP) for Part D drugs. If the price of a drug increases beyond the inflation rate, manufacturers must pay the difference back to Medicare.<\/p>\n

Inflation rebates for Part D drugs are calculated over a 12-month period, with the first period beginning on October 1, 2022. For Part B drugs, however, inflation rebates are calculated quarterly, with the first quarter beginning on January 1, 2023. The rebate amount is calculated by multiplying the number of units sold under Medicare by the amount, if any, that a drug\u2019s price in a given year surpasses its inflation-adjusted price.<\/p>\n

Impact to Beneficiaries<\/strong><\/p>\n

As of April 1, 2023, beneficiaries taking Part B drugs with prices that have increased faster than the rate of inflation also receive reduced coinsurance. For these drugs and biologicals, the beneficiary coinsurance will be capped at 20 percent of the inflation-adjusted amount. This provision is designed to reduce out-of-pocket expenses for Medicare beneficiaries, particularly those taking high-cost medications.<\/p>\n

Trends in Part B Drugs Subject to Inflation Rebates<\/strong><\/p>\n

2024 marks the first full year of publicly available data for Part B drugs subject to inflation rebates, as the Centers for Medicare & Medicaid Services (CMS) has made the list of Part B drugs publicly available for the purposes of showing the reduced coinsurance for patients. However, CMS has not indicated whether it will make a list of Part D drugs subject to inflation rebates publicly available.<\/p>\n

Applied Policy analyzed the Part B drugs subject to inflation rebates for 2024, and identified the following key trends:<\/p>\n