HHS: Adding Inflation-Based Rebates to Medicare Part B Could Top $1.8 Billion in Savings

If Congress were to require a Medicaid-style rebate structure for Medicare Part B prescription drugs, drugmakers would have to pay at least $1.8 billion in annual rebates — about 9 percent of Medicare’s total spending on pharmaceuticals in 2015 — according to an HHS analysis.

Under the Medicaid program, manufacturers are required to pay additional rebates for drugs whose prices rise faster than inflation. But no similar authority exists for Medicare Part B drugs and biologics.

Using Medicaid’s model of inflation-indexed rebates, and based on average manufacturer price, the HHS inspector general’s office projected rebates for 56 of a sample of the 64 most costly drugs in 2015. Five products — Rituxan, Remicade, Neulasta, Herceptin and Orencia — would have accounted for nearly half of the rebates, at $874 million.