November 9, 2021

Reconciliation Provisions: Inflation Rebates

How it Could Work

Drug spending policies had been anticipated to be one of the largest off-sets in the reconciliation bill, however the magnitude of the included drug spending policies has been limited since initial discussions. Upon the release of the preliminary outline of the prescription drug pricing provisions that were to be included in the final bill, CIDSA experts were asked to analyze how the outline of inflation rebates would impact prices. While the full text has been released in the time since this survey began, experts were asked to limit their analysis to the initial outline.

The preliminary drug pricing provisions that pertained to inflation rebates were particularly limited. The rebates are to be based on 2021 and calculated based on the total drug units sold. The preliminary overview, which the experts were provided with for this survey, did not have any additional information on the implementation timing.

What the Experts Think

The CIDSA experts agreed that the inflation rebate provision in the reconciliation bill would reduce drug spending; six experts believe the policy would moderately reduce spending, while the other two believed spending would be minimally reduced. Experts were split on the policy’s impact for list and net prices. One expert opined that the list prices would moderately increase, however the other seven agreed they would moderately decrease. Three of the experts opined that the inflation rebates would not affect drug net prices, but the remaining five believed that they would moderately decrease. The panel of experts unanimously agreed that Medicare beneficiaries, privately-insured patients, and large patient groups would see a moderate increase in drug access but were split across the other groups.

The majority of the experts felt that this policy would be a significant advancement of drug spending policy. The experts also highlighted multiple strengths of the inflation rebate, including the ability for it to be implemented, the size of the affected patient population, and the precedent-setting value of the policy.

Only 8 experts were able to participate in this survey.

How likely would this policy be to reduce drug spending?
Would Increase Drug Spending
Would Not Affect Drug Spending
Would Minimally Reduce Drug Spending
Would Moderately Reduce Drug Spending
Would Significantly Reduce Drug Spending
Would Substantially Reduce Drug Spending
How likely would this policy be to reduce drug prices?
Would Significantly Increase Drug Prices
Would Moderately Increase Drug Prices
Would Not Affect Drug Prices
Would Moderately Decrease Drug Prices
Would Significantly Decrease Drug Prices
List Prices
Net Prices
How likely would this policy be to increase patient drug access?
Would Significantly Reduce Drug Access
Would Moderately Reduce Drug Access
Would Not Affect Drug Access
Would Moderately Increase Drug Access
Would Significantly Increase Drug Access
Rare Disease
Large Patient Groups
How significant is this policy in the evolution of US drug spending policy?
Does Not Advance Drug Spending Policy
Minimally Advances Drug Spending Policy
Moderately Advances Drug Spending Policy
Significantly Advances Drug Spending Policy
Ground-Breaking Shift in Drug Spending Policy
What are strengths and weaknesses of this policy?
Size of Affected Population
Evidence Base in Support of Policy
Precedent-Setting Value
Magnitude of Drug Spending Impact
How important are the following in your analysis of the policy's impact?
Not Important
A Little Important
Somewhat Important
Very Important
Implications on industry investment are unclear
Unclear if fines will be extended to the commercial market
Unclear if "inflation" value will change year to year
Manufacturers may opt to pay the rebate and keep prices high
Ability of manufacturers to game the reference standard for the inflation calculation
Application of the borrowed Medicaid line extension rule
Extension of the rule to Part B

Considerations for Policymakers

The expert panel highlighted several policy concerns for policymakers to consider. The most important considerations were the uncertain implications that this policy could have on industry investment, the application of borrowed Medicaid line extension rule, and that it remains unclear if the “inflation” value will change year to year. Another key consideration was that it is unclear if these fines will be extended to the commercial market. Policymakers should also consider the extension of the rule to Part B and the ability for manufacturers to opt to pay the rebate in favor of keeping their prices high or game the reference standard for the inflation calculation.