August 27,2024

Wyden Highlights Savings for Seniors Thanks to IRA Price-Gouging Penalties

New Finance Committee Analysis Shows Billions in Lower Costs Due to Fewer Price Hikes Among Drugs Administered at the Doctor’s Office

Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., today highlighted savings from the price-gouging penalties created by the Inflation Reduction Act (IRA) in a new analysis from Finance Committee majority staff. The price gouging penalties, also known as the inflation rebate, went into effect last year for Medicare Part B. Part B pays for prescription drugs administered at the doctor’s office, often chemotherapies used to treat cancer.

“Before the Inflation Reduction Act, Big Pharma could charge whatever they wanted and raise prices on seniors as much as they wanted,” Wyden said. “Thanks to the price-gouging penalties I included in the law, price increases are slowing and seniors get help when a drug company does decide to raise the price of a drug. In less than two years, there is already evidence that Big Pharma is no longer using seniors and Medicare as a piggybank.” 

A Finance Committee staff analysis of Medicare Part B drug spending found that the rate of price increases by manufacturers with drugs covered under Medicare Part B slowed significantly since the price gouging penalties went into effect in January 2023, resulting in $3 billion dollars in savings for seniors and taxpayers. In addition, at least 770,000 older Americans with Medicare had a direct reduction in their coinsurance payment for a Part B drug that saw a price increase faster than the rate of inflation. An infographic with more information can be found here.

The analysis comes after the Biden-Harris administration announced the results of the first round of Medicare drug price negotiations on ten high-cost medicines. The administration announced that these lower prices would have saved an estimated $6 billion if they had been in effect last year.

The Centers for Medicare & Medicaid Services (CMS) releases quarterly updates on the price-gouging penalty. The most recent fact sheet can be found here. More information about the policy can be found here.

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