Inflation rebates: CMS lays the ground rules for pharma compliance
The Centers for Medicare and Medicaid Services this afternoon unveiled its first tranche of guidance on how drug companies will comply with new mandatory rebates — if they raise the prices for certain drugs faster than the rate of inflation.
While industry has set the vast majority of its price increases below 10% in recent years, this new provision will likely lead to even smaller increases to avoid the rebates.
Meena Seshamani, CMS deputy administrator, said on a press call Thursday that requiring rebates for price increases for drugs already on the market will discourage runaway price increases and temper future growth of the market.
HHS recently released a report outlining what the rebates could do as more than 1,200 drug price increases from July 2021 to July 2022 exceeded the inflation rate of 8.5% for that time period.
The rebates themselves will go to reducing out-of-pocket drug costs for people with Medicare, CMS said, and the centers are seeking comment on the Part D and Part B guidance documents.
The guidance discusses everything from the process CMS will use to determine the number of drug units for calculating rebates, to the process for imposing monetary penalties (at least 125% of the rebate amount) on manufacturers that fail to pay rebates.
As far as a timeline for what pharma companies should expect to see, CMS points to:
- March 11 – The end of the 30-day comment period on the guidance released today.
- April 1 – Those in Medicare may begin paying a lower coinsurance because of the rebates.
- Q4 2023 – CMS expects to consider the comments and issue revised guidance on the inflation rebates.
- September 30, 2025 – When CMS must invoice drug companies for the Part B inflation rebates they owe Medicare for calendar quarters in 2023 and 2024.
- December 31, 2025 – When CMS must invoice drug companies for the Part D inflation rebates for the periods beginning October 1, 2022 and October 1, 2023.
