By Ahmed Abulenein

WASHINGTON, March 15 (Reuters) – The U.S. government said on Wednesday it will subject 27 drugs to inflation penalties, a move that will reduce out-of-pocket expenses for Medicare beneficiaries by $2 to $390 per average dose.

The Cut Inflation Act, signed by President Joe Biden, includes a provision penalizing drugmakers for charging prices that rise faster than inflation for people with disabilities or age 65 and older in the government health program Medicare.

“Beginning April 1, Medicare beneficiaries will pay less co-insurance for Part B drugs whose prices are rising faster than inflation,” White House domestic policy adviser Susan Rice said during an interview. of a press conference.

The list includes Humira, AbbVie Inc’s top-selling arthritis drug; CAR-T cancer therapy from Gilead Sciences Inc, Yescarta; and Seagen Inc’s targeted cancer therapy, Padcev, the White House said in a document.

Companies that raise their prices above the rate of inflation will be required to pay Medicare the difference as a reimbursement. Those who do not pay the refund will face a penalty equal to 125% of the refund amount.

The government will begin billing companies for reimbursements in 2025, but Medicare will begin reducing members’ out-of-pocket costs in April.

According to Wells Fargo analyst Mohit Bansal, the direct impact on drugmakers appears small at this time.

However, the announcement is “a signal from the government to industry that it is serious about containing rising drug prices. We suspect companies may be more cautious about raising their prices due of that,” he said.

Medicare began considering price increases in October 2022 for Medicare Part B drugs, often used in hospital, which are complicated biologics or single-maker drugs.

The government will update the drug list quarterly.

Price increases for half of all Medicare-covered drugs exceeded inflation from 2019 to 2020, which averaged 1% that year. A third of them recorded price increases of more than 7.5%.

The Department of Health and Human Services (HHS) will also issue initial guidance on Wednesday on how its Medicare prescription drug negotiation process will work, Rice said. (Reporting by Ahmed Aboulenein in Washington, additional reporting by Manas Mishra in Bengaluru; Editing in Spanish by Ricardo Figueroa)

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