Commonwealth Fund October 28, 2025
Concern over prescription drug costs has been growing amid steep list price increases of many brand-name drugs. Before the Inflation Reduction Act (IRA) passed in 2022, drug manufacturers increased prices an average of 4.2 percent on more than 900 brand-name drugs — a new record. To discourage such price hikes, the IRA requires manufacturers to pay inflation rebates to the Medicare program when they increase certain drug prices faster than inflation. This rule was modeled off a longstanding policy in the Medicaid program.
This year, 2025, will be the first in which drug manufacturers will be invoiced for any rebates they owe the federal government under the new policy.
How do the inflation rebates work in the Medicaid program?
Medicaid...
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