AbbVie, Gilead, Seagen among firms fined for raising prices faster than inflation
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The Biden administration on Wednesday published a list of 27 Medicare Part B drugs that will be subject to inflation penalties for the first time in the U.S., including some key pipeline products from AbbVie (ABBV), Gilead (GILD), and Seagen (SGEN) in the group.
The measure, part of President Joe Bidenâs Inflation Reduction Act, aims to reduce out-of-pocket expenses for some Medicare recipients and discourage drugmakers from raising prices faster than inflation.
âWith the inflation rebate program, we are fighting to ensure seniors can afford the treatments they need, taxpayers arenât subsidizing drug company excess prices, and the Medicare program is strong for millions of beneficiaries now and in the future,â Health Secretary Xavier Becerra said.
Accordingly, the Part B beneficiaries taking these drugs will pay lower co-insurance starting April 1 â June 30, 2023, saving $2 â $390 per average dose, the Centers for Medicare & Medicaid Services (CMS) said.
Drugmakers that increase prices faster than inflation will be required to pay the difference in the form of a rebate to Medicare. However, the government will start sending invoices for 2023- and 2024 inflation rebates only from fall 2025.
The companies that donât pay will be required to pay a penalty amounting to 125% of the rebate.
AbbVieâs (ABBV) blockbuster rheumatoid arthritis therapy Humira and Gileadâs (GILD) CAR-T cell therapies Yescarta and Tecartus are part of the first set of drugs that will be subject to inflation rebates, according to data for Q1 2023.
Bladder cancer therapy, Padcev, marketed by Seagen (SGEN) in collaboration with Merck (MRK) and Astellas (OTCPK:ALPMF) (OTCPK:ALPMY), is also included in the list. Government plans to update the list every quarter.
This week, Pfizer (NYSE:PFE) agreed to acquire Seagen (SGEN) for $43B in cash.