CMS Will Require Drugmakers to Pay if Price Hikes Exceed Inflation

Newly released federal guidance details how the government will punish drug companies who hike prices faster than the rate of inflation for some prescription Medicare medicines.

Administered by the Centers for Medicare and Medicaid Services (CMS), the Medicare Prescription Drug Inflation Rebate Program requires drug companies to pay Medicare a rebate if they raise their prices for certain Part B and Part D drugs faster than the rate of inflation. CMS will calculate the rebate and the money will be deposited in a supplementary medical insurance trust fund.

For Part D drugs, rebates would be retroactive to Oct. 1, 2022. For Part B drugs, the price tracking began on Jan. 1.

Drugmakers who fail to comply with the law would be subject to civil monetary penalties of 125 percent of the rebate amount owed.

CMS is seeking public comment on the guidance until March 11.