US Department of Health and Human Services (HHS) published a list of 27 drugs have Medicare Part B prices rise faster than inflation, in violation of the Inflation Reduction Act.
The drug companies will owe the penalty, in the form of a discount paid to Medicare, which will be deposited into the Medicare Trust Fund, which helps pay for medical services. Companies will be billed for 2023 and 2024 no later than autumn 2025, according to a statement from the government.
Pfizer (PFE) has five drugs listed, along with Seagen’s (SGEN) Padcev — will soon be part of Pfizer’s portfolio. by AbbVie (ABBV) blockbuster Humira — facing competition with biosimilars for the first time this month, Roche’s (RHHBY) Mircera, and Gilead’s (GILD) Yescarta, also on the list.
The impact on each company appears to be mixed.
Of Pfizer’s five drugs, most are not the main source of revenue. For example, only one company accounted for $269 million in global sales in 2022. Meanwhile, AbbVie reported $21 billion in revenue for Humira in 2022.
The companies did not immediately return a request for comment. Shares of AbbVie and Roche were lower in Wednesday’s trading, but most of the major pharmaceutical companies appeared unaffected by the news.
HHS said in a statement that the drug will also cost less for patients with Medicare or Medicare Advantage, with lower coinsurance beginning April 1 through June 30, which could save up to they are as little as $2 or as much as $390 per average dose.
The move is part of the Biden administration’s Inflation Reduction Act (IRA), which focuses on reducing the cost of generic drugs and punishing drugmakers for artificially raising prices. The department is also expected to hold a press conference to discuss the list of drugs for which Medicare will negotiate prices, a power given to them by the IRA.
“The Biden-Harris administration believes that people with Medicare should not be troubled when pharmaceutical companies inexplicably increase the prices of their drugs,” HHS Secretary Xavier Becerra said in a statement Wednesday.
“President Biden makes reducing the cost of prescription drugs for Americans a top priority, and we are using every lever at our disposal to deliver results,” he added.
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