Provisions Would Require Companies to Pay Medicare Back When Prices for Part B Drugs Rise Faster Than Rate of Inflation
WASHINGTON, DC – U.S. Senator Gary Peters (MI) today applauded Senate Finance Committee approval of provisions based on his legislation to hold drug companies accountable and help lower the cost of health care for seniors. The provisions approved will require drug companies to pay rebates to Medicare when they raise prices for Medicare Part B drugs higher than the rate of inflation. Medicare reimbursement for these drugs is based on the average sales price of the drugs without limit, giving manufacturers every incentive to raise their prices if left unchecked. Seniors are also required to pay a specific percentage of these high prices out-of-pocket. U.S. Senator Debbie Stabenow has cosponsored Peters’ provisions.
“Michiganders should never have to choose between paying for the medication they need or other basic living expenses. Unfortunately, this is a decision that too many families and seniors have to make every day,” said Senator Peters. “This is an important step forward in holding drug companies accountable for the high costs of drugs that some seniors need for treatments including for dialysis and to fight certain types of cancer. I’ll continue working to lower health care and prescription drug prices for Michigan families and seniors.”
“Nearly one in three adults hasn’t taken a prescribed medicine due to its costs,” said Senator Stabenow. “Drug companies are price gouging and it needs to stop. These provisions protect seniors who depend on Part B drugs the most.”
Medicare Part B covers physician services delivered outside of a hospital, including drugs administered by physicians. This includes infusions or injections in a physician’s office, such as immunosuppressive drugs following an organ transplant, as well as drugs related to dialysis treatments and certain cancer drugs. Currently, Medicare pays 80 percent of the amount paid to providers and patients are responsible for the remaining 20 percent in cost-sharing.
Spending on Medicare Part B drugs has grown rapidly in recent years. Among the 10 products that account for most Medicare Part B drug expenditures, 8 range from roughly $10,000 to $30,000 annually per user. Other Part B drugs used by a smaller number of beneficiaries cost over $75,000 annually per patient.
The provisions introduced by Senators Peters and approved by the Senate Finance Committee require drug companies to pay rebates to Medicare Part B when they raise prices higher than inflation. This bill will hold drug companies accountable by requiring them to pay Medicare back when prices for Part B drugs rise faster than the rate of inflation. Specifically, drug manufacturers would be required to pay Medicare a rebate if the drug’s average sales price increases more than inflation. The rebate will deposited into the Trust Fund to help protect Medicare from insolvency.
Peters has long supported efforts in Congress to reduce health care and drug costs and improve Medicare. In January, Peters helped introduce legislation to permit Medicare to negotiate for lower prices on behalf of over 2 million Michiganders eligible for enrollment in Medicare Part D. Peters also joined Senator Stabenow to introduce the Medicare at 50 Act, which would allow people between the ages of 50 and 64 years old to buy into a Medicare plan.