The Joe Biden administration in the USA recently proclaimed that during the third quarter of 2023 it would implement inflation penalties on around 43 drugs. This plans the action includes the imposition of fines on these drugs as part of the administration's efforts to reduce costs for older Americans. These Drugs are as follows:

•             Acetaminophen (Paracetamol) 

•             Alfentanil hcl

•             Allopurinol sodium

•             Amnioband

•             Bendamustine

•             Bendamustine

•             Biorphen

•             Bupivacaine

•             Cefiderocol

•             Ciltacabtagene

•             Cimerli

•             Clindamycin phosphate

•             Cytal

•             Dermagraft

•             Eflapegrastim-xnst

•             Elahere

•             Epinephrine

•             Esmolol hydrochloride, 10mg

•             Esmolol hydrochloride

•             Fiasp for insulin pump use

•             Hepari

•             Hmatrix

•             Interfyl

•             Invega hafyera/trinza

•             Ixinity, 1 iu

•             Labetalol hydrochloride

•             Labetalol hydrochloride, 5mg (hikma)

•             Leuprolide depot 7.5mg

•             Lisocabtagene maraleucel;

•             Lyumjev for insulin pump use

•             Metronidazole

•             Naxitamab-gqgk

•             Nitroglycerin

•             Palingen or palingen xplu

•             Panzyga

•             Plasminogen tvmh

•             Repriza

•             Teclistamab cqyv

•             Teplizumab mzwv

•             Tremelimumab-actl

•             Vasopressin (am reg) 1 u

•             Vasopressin

As a result of this, pharmaceutical manufacturers are required to provide a justification for any price increases that exceed the rate of inflation under the Inflation Reduction Act (IRA). The Centres for Medicare & Medicaid Services examines these explanations, and if they are deemed insufficient then they impose fines on the offending businesses. According to Centres for Medicare & Medicaid Services (CMS), the inflation penalties are intended to deter excessive price increases and encourage manufacturers to match their pricing strategies with reasonable standards. As per the agency, the penalties will apply to a wide variety of medications, including both name-brand and generic products. CMS however made no mention of particular fines for particular drugs.

Furthermore, If these drug prices rise faster than the rate of inflation, Medicare beneficiaries may be required to pay a lower coinsurance amount under the IRA. Depending on their individual coverage, the latest actions by CMS, according to CMS, could reduce costs for older Americans by as much as around $449 per dose beginning July 1. Between July 1 and September 30, 2023, there will be a lower coinsurance for prescription medications. Since its announcement in March, the Biden administration has suggested to impose sanctions on pharmaceutical companies that increase their prices excessively, including, among others, AbbVie's Humira arthritis medication and Seagen's Padcev cancer treatment.

The CMS decision is piece of a larger U.S. government initiative to reduce drug costs. The IRA, which became law in 2022, has a number of provisions that lower out-of-pocket costs for prescription medications. As a significant policy change that proponents of lower drug prices have long sought, it also gives Medicare the authority to bargain drug prices directly with manufacturers.

Moreover, as per the current scenario- still, it’s Unclear how the industry will react to these fines and whether a long-term change in pricing policies will result from them. Merck, however, filed a lawsuit against the Biden administration recently the U.S. District Court for the District of Columbia, challenging the constitutionality of the IRA's drug price-negotiation provisions and asserting that the law is unconstitutional under the First and Fifth Amendments.