Casey, Colleagues Send Letter Highlighting Lower Drug Costs for Seniors

Letter to CMS seeks information on lower Part B coinsurance for prescription drugs due to IRA-created price gouging penalty

Washington, D.C. – Today, U.S. Senator Bob Casey (D-PA) joined 21 Senators in a request to the Biden Administration to publicize the effect of the Inflation Reduction Act’s Medicare Part B inflation rebate on coinsurance in the program.

“We strongly urge CMS to provide the following information quickly to help seniors in traditional Medicare and their families plan for lower cost-sharing on their Part B medications: (1) a list of the common names of Medicare Part B medications that will be subject to a coinsurance reduction on April 1, 2023; and (2) the percentage and amount of the coinsurance reduction for each Part B drug,” the Senators wrote. “High Part B drug prices set by manufacturers place a heavy burden on Medicare beneficiaries, since patients pay 20 percent of the cost of these drugs… The IRA penalizes inflated drug prices and lowers Part B cost sharing to combat this financial burden.”

The letter, sent to Center for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure, comes as the Biden Administration continues to implement the Inflation Reduction Act’s drug pricing provisions.

The IRA protects Medicare beneficiaries who take Part B drugs (such as physician-administered infusions and injections used to treat cancer and rheumatoid arthritis) if manufacturers continue price increases at rates that outpace inflation by reducing coinsurance for Medicare beneficiaries taking these same medications. Specifically, if the price Medicare faces for a Part B drug exceeds the amount that the drug would have cost if the manufacturer’s price only increased by the rate of inflation, then beginning April 1, 2023, a beneficiary’s coinsurance will be calculated based on 20 percent of the lower (inflation-adjusted) price. In other words, with implementation of the IRA’s Part B coinsurance reduction, beneficiaries who depend on costly clinic-administered medications will experience lower cost sharing if drug price increases outpace inflation. If the penalty is not applied, that means drug manufacturers did not increase their prices faster than inflation.

Senator Casey sent the letter with U.S. Senators Ron Wyden (D-OR), Jon Tester (D-MT), Michael Bennet (D-CO), Amy Klobuchar (D-MN), Sherrod Brown (D-OH), Kirsten Gillibrand (D-NY), Catherine Cortez Masto (D-NV), Ben Cardin (D-MD), Tim Kaine (D-VA), Richard Blumenthal (D-CT), Joe Manchin (D-WV), Raphael Warnock (D-GA), Jeff Merkley (D-OR), Tammy Baldwin (D-WI), Mark Warner (D-VA), Tom Carper (D-DE), Peter Welch (D-VT), Sheldon Whitehouse (D-RI), Mark Kelly (D-AZ), Patty Murray (D-WA), and Chris Murphy (D-CT).

The full letter can be found here and below.

Chiquita Brooks-LaSure

Administrator Centers for Medicare and Medicaid Services

7500 Security Boulevard

Baltimore, MD 21244

Dear Administrator Brooks-LaSure,

The Inflation Reduction Act (IRA) includes landmark provisions that will lower the cost of prescription drugs for more than 60 million Americans with Medicare coverage.  Several provisions have already taken effect – including a $35 cap on the monthly out-of-pocket cost for insulin, $0 copay for adult vaccines, and penalties on pharmaceutical manufacturers when they increase their prescription drug prices faster than the rate of inflation. We applaud the Centers for Medicare & Medicaid Services (CMS) for implementing these important provisions, including by releasing early guidance for the Medicare Part B and Part D inflation rebates. The rebates penalize manufacturers if they increase prices for Part B or Part D drugs faster than inflation.

The IRA further protects Medicare beneficiaries who take Part B drugs (such as physician administered infusions and injections used to treat cancer and rheumatoid arthritis) if manufacturers continue price increases at rates that outpace inflation by reducing coinsurance for Medicare beneficiaries taking these same medications. Specifically, if the price Medicare faces for a Part B drug[1][1] exceeds the amount that the drug would have cost if the manufacturer’s price only increased by the rate of inflation, then beginning April 1, 2023, a beneficiary’s coinsurance will be calculated based on 20 percent of the lower (inflation-adjusted) price. In other words, with implementation of the IRA’s Part B coinsurance reduction, beneficiaries who depend on costly clinic-administered medications will experience lower cost sharing if drug price increases outpace inflation.

We strongly urge CMS to provide the following information quickly to help seniors in traditional Medicare and their families plan for lower cost-sharing on their Part B medications: (1) a list of the common names of Medicare Part B medications that will be subject to a coinsurance reduction on April 1, 2023; and (2) the percentage and amount of the coinsurance reduction for each Part B drug.

High Part B drug prices set by manufacturers place a heavy burden on Medicare beneficiaries, since patients pay 20 percent of the cost of these drugs. According to the Medicare Payment Advisory Commission (MedPAC), Medicare spent $42 billion on Part B drugs in 2021 alone. Thus, when manufacturers increase Part B drug prices, out-of-pocket costs for seniors increase substantially as well. The IRA penalizes inflated drug prices and lowers Part B cost sharing to combat this financial burden. 

Manufacturers can avoid the Medicare inflation penalty only if they reduce drug prices or slow price growth below the rate of inflation. Indeed, many manufacturers appear to be restraining their price increases since the IRA’s enactment. For drugs that increased prices, average drug list price increases in January 2023 were 5.4 percent. Over the last ten years leading up to 2023, drug price increases averaged 8.4 percent.[2][2] Reduced drug prices and moderation in price growth will result in real savings for patients in Medicare and other types of health insurance as well as for patients who remain uninsured.

Thank you for your continued commitment to delivering the IRA’s promise of lower Medicare prescription drug costs for seniors and people living with disability. We look forward to your timely response.