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February 17, 2023

HHS Launches Model Programs Aimed at Lowering Drug Prices

On February 14. 2023, the HHS launched three prescription medication model programs targeted at lowering drug prices and improving quality of care. The models follow up on the Inflation Reduction Act of 2022 and several provisions in the Act aimed at shrinking prescription drug costs for people with Medicare, including a $2,000 cap on out-of–pocket pharmaceutical costs for those with Medicare Part D coverage.

The models include a $2 per month cap for certain generic medications for treatment of chronic conditions; financing for cell and gene therapy; and payment models for drugs approved under FDA accelerated approval.  All three models are intended to expand access to underserved communities and lower out-of-pocket costs.

Additionally, on February 9, HHS released initial guidance for Medicare’s Prescription Drug Inflation Rebate Program created by the Inflation Reduction Act. This program implements the requirement for pharmaceutical companies to rebate money to Medicare when their prices for certain prescription drugs dispensed to Medicare beneficiaries increase faster than inflation.

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