Share of Sales Subject to Medicare Inflation Rebates and Price Increases of Top-Selling Drugs

To examine whether the new Medicare inflation rebate policy was associated with changes in manufacturer pricing behavior.

In this cross-sectional study of 156 top-selling brand-name drugs, we used linear regression to evaluate whether there was an association between drugs' exposure to the policy (i.e., Medicare's share of net US sales) and differences in year-over-year price changes before (2021-2022) versus after (2022-2023, 2023-2024) the policy took effect.

The study used Medicare spending data and average sales prices from the Centers for Medicare and Medicaid Services, wholesale acquisition costs from Eversana NAVLIN's Price & Access database, and sales revenue and estimated rebates from SSR Health. Vaccines, biosimilars, drugs approved after 2020, and those with generic or biosimilar competition before 2023 were excluded. Drugs were stratified by whether they derived most sales from Medicare Part B or Part D.

The median Medicare share of net sales was 28% (IQR: 18%-37%) for 50 Part B drugs and 32% (IQR: 16%-49%) for 106 Part D drugs. Median year-over-year price changes in 2021-2022, 2022-2023, and 2023-2024 were 3.2%, 2.9%, and 3.4% for Part B drugs and 5.0%, 5.9%, and 4.9% for Part D drugs. There was no association between drugs' Medicare share of net sales and differences in price changes pre- vs. post-policy for Part B drugs (2023: p = 0.99; 2024: p = 0.09). For Part D drugs, each 10% increase in drugs' share of Medicare sales was associated with a 0.18% (95% CI, 0.01%-0.35%, p = 0.04) higher price change in the first year after policy implementation; there was no significant association in the second year (p = 0.17).

Medicare inflation rebates were not associated with smaller price increases among the top-selling drugs most affected by the policy. Additional measures are needed to prevent drug manufacturers from raising prices each year, such as extending inflation rebates to commercially insured patients.