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  • Washington Highlights

    CMS Issues Revised Guidance on Medicare Prescription Drug Inflation Rebate Program


    Katherine Gaynor, Hospital Policy and Regulatory Analyst
    For Media Inquiries

    On Dec. 14, The Centers for Medicare & Medicaid (CMS) issued two sets of revised guidance on the Medicare Prescription Drug Inflation Rebate Program for certain drugs covered under Medicare Part B and Part D. This prescription drug law requires drug companies to pay a rebate, which is calculated by the CMS, to the Medicare Trust Fund if they raise their prices for certain drugs faster than the rate of inflation. The prescription drug inflation rebates apply to Medicare Part B single-source drugs and biologics as well as certain Medicare Part D drugs and biologics. The agency will begin to issue invoices for these rebates starting in 2025, including for years 2022, 2023, and 2024. The Part D inflation rebate period began on Oct. 1, 2022, and the Part B inflation rebate period began Jan. 1, 2023. Additionally, the CMS released a list of 48 prescription drugs for which Part B beneficiary coinsurances may be lower between Jan. 1, 2024 and March 31, 2024, due to prices increasing faster than inflation.  

    The revised guidance provides clarification on what drugs are eligible for rebates and which are excluded, as well as issued clarifications to the calculation and enforcement of these rebate payments. Additionally, in response to feedback CMS received on drug shortages and supply chain disruption, the revised guidance includes guardrails to minimize incentives for drug companies to remain on a shortage list, delay resolving a severe supply chain disruption, or maintain a situation in which a generic drug would be at risk of shortage in order to avoid paying an inflation rebate. The revised guidance also provides a greater rebate reduction for Part D sole-source generic drugs as well as Part B and Part D plasma-derived products in shortage.