The Inflation Reduction Act of 2022 (IRA) was signed into law on August 16, 2022 and includes several provisions to lower prescription drug costs for Medicare beneficiaries and reduce drug spending by the federal government. One provision of the IRA requires drug manufacturers to pay a rebate to the federal government if prices for certain drugs and biologics covered under Medicare Part B and Part D increase faster than the rate of inflation (CPI-U).Price changes will be measured based on the average sales price for Part B drugs and the average manufacturer price for Part D drugs. If price increases exceed inflation, drug manufacturers will be required to pay the difference in a rebate to Medicare equal to the total number of units sold in Medicare multiplied by the amount by which a drug’s price in a given year exceeds the inflation-adjusted price.
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