HR2554-119

What This Bill Does

The Lower Drug Costs for Families Act modifies Medicare Part B and Part D inflation rebate formulas so rebate exposure reaches units beyond traditional Medicare payment. For Part B rebatable drugs, the bill uses NDC-level unit data reported under section 1847A, subtracts Medicaid-paid units reported by states, converts the remaining NDC units into billing units, and applies the approach beginning with calendar quarters on or after January 1, 2026. It also moves Part B base-period dates from 2021 or 2020 back to 2016. For Part D rebatable drugs, it uses manufacturer average-manufacturer-price reporting and state Medicaid reports, excludes Medicaid-paid units, units already subject to Part B rebates, and beginning in 2026 units discounted under the 340B program. It also moves Part D base periods back to 2016 and applies the amendments to applicable periods beginning on or after October 1, 2025. The practical effect is to make manufacturers face broader inflation-rebate obligations when drug prices rise faster than statutory benchmarks.

Who Benefits and How

Commercially insured families benefit if broader inflation rebates reduce incentives for manufacturers to raise prescription drug prices faster than inflation. Medicare beneficiaries benefit indirectly because Part B and Part D rebate formulas are tightened and benchmarked to earlier base periods. Federal health programs benefit from manufacturer rebate calculations that account for more units while excluding Medicaid, Part B rebate, and 340B units to avoid double counting. State Medicaid programs benefit from explicit use of state-reported Medicaid units in rebate calculations.

Who Bears the Burden and How

Prescription drug manufacturers must provide and revise data used to calculate broader Part B and Part D inflation rebates. CMS rebate administrators must convert NDC units to billing units, apply 2016 base periods, and reconcile manufacturer and state reports. 340B covered entities may need their discounted units separated from Part D rebate calculations beginning in 2026. Drug pricing teams face stronger penalties when price increases exceed the inflation benchmarks.

Key Provisions

• Amends Part B inflation rebate unit calculations by subtracting Medicaid-paid units and converting remaining NDC units into billing units.
• Moves Part B rebate base periods back to 2016 and applies the rule to quarters beginning January 1, 2026.
• Amends Part D inflation rebate calculations to use AMP reports while excluding Medicaid, Part B rebate, and 340B-discount units.
• Moves Part D rebate base periods back to 2016 and applies the rule to applicable periods beginning October 1, 2025.