Prices for more than 1,200 prescription drugs rose faster than inflation in the past year, according to a recent report from the Department of Health and Human Services.
However, starting next year, drug manufacturers with drug prices that exceed the rate of inflation and are covered under Medicare Parts B and D will be required to pay rebates to the agency. This policy change could potentially mark down the price of prescription drugs for patients moving forward.
“In recent years, prescription drug prices have skyrocketed, but thanks to the Inflation Reduction Act, America’s families will soon start seeing relief,” HHS Secretary Xavier Becerra said in a statement.
Typically, prescription drug price increases occur every year in January or July. The latest report found that the annual increase in 2022, however, was much higher than in previous years.
In total, there were 1,216 drugs that saw price increases higher than the 8.5% inflation rate during the period from July 2021 to July 2022. Collectively, those drugs experienced a 31.6% price increase.
In July 2022, those drugs saw an average price increase to $250 per drug, while in January it was $150 per drug. In addition, several drug costs rose by more than $20,000, or 500%, in 2022.
The report release coincides with the Medicare Part D rebate provision from the Inflation Reduction Act going into effect. October 1 marked the beginning of the first 12-month period during which drug companies will have to pay rebates to Medicare if certain Part D drug prices rise faster than the rate of inflation during that period.
In August, Congress passed the IRA, which included several historic drug pricing measures after years of going back and forth on the issue. The bill gives Medicare the ability to negotiate prices for certain expensive drugs covered under Medicare Parts B and D starting in 2026. The legislation also caps out-of-pocket spending for people enrolled under Medicare Part D starting in 2024.
While the federal government has not yet chosen which 10 drugs will fall under the Medicare negotiation provision starting in 2026, it’s outlined that the drugs will likely have some of the highest costs to Medicare. These include small-molecule or biologic drugs approved over a decade ago as well as single-source drugs with no generic or biosimilar approved.
To read a January 2024 article on AARP’s listing of 10 prescription drugs with excessive price increases, click here.