North Chicago-based drugmaker AbbVie must pay back Medicare for raising the price of its blockbuster drug Humira too quickly, the federal government said Wednesday.
The penalty follows years of criticism over the price of Humira and legal maneuvering by AbbVie that staved off competition for the drug in the U.S. until this year.
AbbVie did not immediately respond to requests for comment Wednesday morning.
Humira is used to treat rheumatoid arthritis, Crohn’s disease, ulcerative colitis and other conditions, and is AbbVie’s top-selling drug. As of late last year, Humira cost as much as $81,590 a year before rebates and discounts, according to SSR Health.
AbbVie and more than a dozen other drugmakers are facing the penalties, for the first time, as part of the federal Inflation Reduction Act. Under that Act, which was signed into law last year, drug companies are required to pay rebates to Medicare if they raise prices for certain drugs faster than the rate of inflation.
Humira is one of 27 Medicare Part B drugs that was cited by the federal government Wednesday for excessive price increases. Medicare Part B drugs are generally administered by physicians in doctors’ offices or hospital outpatient centers.
The Centers for Medicare & Medicaid Services will calculate the amounts of the rebates drugmakers must pay, but has not yet said exactly how much they will be. Drugmakers will have to pay the rebates in 2025.
People with Medicare, however, may start seeing lower out-of-pocket costs for the 27 drugs, including Humira, much sooner than that. Seniors may see their out-of-pocket costs for the 27 drugs fall by anywhere from $2 to $390 per average dose starting in April, under the requirements of the law.
“With the inflation rebate program, we are fighting to ensure seniors can afford the treatments they need, taxpayers aren’t subsidizing drug company excess prices, and the Medicare program is strong for millions of beneficiaries now and in the future,” said U.S. Department of Health and Human Services Secretary Xavier Becerra, in a news release.
Other major drugmakers will also have to make payments, under the law, for raising prices of some of their medications too quickly. A number of the 27 drugs listed by the federal government Wednesday are made by Pfizer, and at least one is made by Johnson & Johnson.
The Inflation Reduction Act also allows Medicare to negotiate lower prescription drug prices for seniors, caps the cost of insulin at $35 and makes recommended vaccines free for Medicare beneficiaries, among other things.
The announcement Wednesday is one of a number of challenges AbbVie faces this year, when it comes to Humira. In 2021, AbbVie sold $20.7 billion worth of Humira, making up nearly 37% of the company’s total revenue that year. But, for the first time this year, AbbVie will face competition for the drug in the U.S., with more than half a dozen copycat versions of Humira expected to become available over the next year.
AbbVie was able to hold off competition until this year through a number of legal actions.
The core patent for Humira expired in 2016, and the U.S. Food and Drug Administration began approving copycat versions, called biosimilars, of Humira that year. But AbbVie took out more than 130 patents on Humira. In a move that’s common in the drug industry, AbbVie sued the biosimilar makers for infringement on those other patents. AbbVie and those other companies then settled the lawsuits, with agreements that the companies would not try to sell their biosimilars in the U.S. until 2023.
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