How Medicare Inflation Rebates Cut Your Drug Costs

Inflation rebates are reshaping how Medicare handles prescription drug prices—and how much you pay at the pharmacy counter.

Here’s what that means in plain language, plus practical steps to make sure you don’t leave savings on the table.

What are Medicare inflation rebates?

Inflation rebates are penalties drug manufacturers pay when they raise prices faster than the general inflation rate. Under the Inflation Reduction Act, Medicare compares a drug’s price to inflation (using CPI-U); if the increase exceeds inflation, the manufacturer owes a rebate back to Medicare. This policy applies to both Medicare Part B (typically office-administered drugs like infusions and injections) and Part D (retail and mail-order prescriptions).

Why it matters for you: when a manufacturer owes a rebate, Medicare can reduce what beneficiaries owe. For many Part B drugs, the patient’s 20% coinsurance is based on an “inflation-adjusted” price, which lowers out-of-pocket costs at the point of service. In Part D, the rebates discourage price hikes and work alongside other reforms to limit what you spend over the year.

Scope-wise, Medicare regularly updates which drugs are affected. In a recent quarter, 64 Part B drugs were flagged for inflation rebates—a list that changes over time. These medications span high-impact categories such as oncology, diabetes, and cardiovascular care, which means the policy can touch treatments many beneficiaries rely on.

Which medications are affected?

The “affected list” is dynamic: it’s refreshed periodically as prices and inflation shift. Rather than memorizing brand names, use these quick checks to see if your medication is currently subject to inflation rebates:

Part B (clinic- or hospital-administered drugs): Check the Centers for Medicare & Medicaid Services (CMS) quarterly Part B inflation rebate list or ask your provider’s billing office if your drug’s coinsurance is being reduced this quarter.
Part D (pharmacy-dispensed drugs): Watch for plan notices, Explanation of Benefits (EOB) updates, and pharmacy receipts that reflect lower member cost-sharing if the plan’s negotiated price is affected. Your plan’s customer service can confirm whether a drug is subject to an inflation-related adjustment.
Therapeutic areas often impacted: Cancer treatments, diabetes drugs (including certain non-insulin therapies), autoimmune/inflammatory medicines, and cardiovascular drugs have historically seen notable list-price increases—making them candidates for inflation rebates when hikes outrun inflation.

How much can you save?

Your savings depend on the drug, how much its price exceeded inflation, and whether it’s covered under Part B or Part D.

Part B example (coinsurance): Suppose an infusion previously had an allowed charge of $2,000, and your 20% coinsurance was $400. If the inflation rebate reduces the inflation-adjusted amount by 6%, the allowed charge might effectively drop to $1,880—bringing your coinsurance down to $376. That’s a $24 reduction per treatment cycle. For drugs with higher price growth, the savings can be larger.
Part D dynamics: Rebates put pressure on manufacturers to avoid price hikes above inflation, helping stabilize premiums and out-of-pocket costs. While reductions may not always show up as a line item at the pharmacy, the effect compounds over time by curbing year-over-year increases.

Remember, the inflation rebate is just one part of broader Medicare drug reforms that also influence your wallet, such as insulin caps and the coming out-of-pocket maximum in Part D.

Where inflation rebates fit in the bigger Medicare picture

$35 insulin cap (Part D and some Part B insulins): Many insulin products are capped at $35 for a month’s supply for Medicare beneficiaries.
Vaccines at $0 (Part D): ACIP-recommended vaccines covered by Part D (like shingles) now have no cost sharing.
Part D out-of-pocket cap: Beginning in 2025, annual Part D out-of-pocket spending will be capped at $2,000, with an option to “smooth” costs over the year.
Drug price negotiations: Medicare will begin using negotiated prices for a first set of high-spend drugs starting in 2026, further addressing affordability.

Together with inflation rebates, these policies aim to protect beneficiaries from sudden spikes in prescription drug costs and to promote long-term sustainability in Medicare.

How to navigate the changes and maximize savings

1) Verify whether your drugs are affected

Ask your pharmacist or provider’s billing office if your medication has an inflation-adjusted price this quarter.
Check your plan’s EOB and monthly statements for any notes about reduced coinsurance or cost-sharing changes.
Search the CMS website for the latest Part B inflation rebate list or contact 1-800-MEDICARE for guidance.

2) Review your Medicare plan

Formulary and tiering: Make sure your drugs are on your plan’s formulary at a favorable tier. If not, ask your prescriber about alternatives that offer similar outcomes at lower cost (including generics or biosimilars).
Pharmacy network: Use preferred or mail-order pharmacies when available to lower copays.
Annual enrollment: During open enrollment, compare total costs (premiums + deductibles + copays), not just premiums. Inflation rebates can help, but plan design still matters.

3) Talk with your care team about options

Biosimilars and generics: Ask whether a clinically appropriate biosimilar or generic is available. Competition plus rebates often yields meaningful savings.
Dosing and synchronization: Align refill dates and consider 90-day supplies (when appropriate) to reduce trips and avoid gaps in therapy.
Prior authorization and exceptions: If a lower-cost alternative won’t work for you, your prescriber can request an exception to keep you on the most effective therapy.

4) Use financial assistance you may qualify for

Extra Help (Low-Income Subsidy): Expanded in 2024, Extra Help can significantly reduce premiums and copays for Part D. Apply through Social Security or your state Medicaid office.
State Pharmaceutical Assistance Programs (SPAPs): Some states offer additional help that works with Medicare.
Manufacturer support: For Part D drugs, check for patient assistance or copay programs where permitted.

Frequently asked questions

Do inflation rebates mean my drug will always get cheaper?

Not always. Rebates primarily penalize price hikes that outpace inflation; they don’t guarantee a long-term price decrease. However, they can lower Part B coinsurance and discourage future price spikes, helping stabilize costs.

How will I know if my coinsurance changed?

For Part B, your provider’s billing office and your Medicare Summary Notice (MSN) will reflect any inflation-adjusted coinsurance. For Part D, look for notes on your EOB or ask your plan’s customer service.

Is the list of affected drugs final?

No. The list is updated periodically. A drug that isn’t affected this quarter could be in a future update if its price growth exceeds inflation.

Bottom line

Medicare’s inflation rebates are a practical step toward fairer prescription drug prices. By penalizing above-inflation price hikes, the program helps lower coinsurance for certain Part B treatments today and nudges Part D prices toward greater stability tomorrow. To capture the savings: verify whether your medications are affected, review your plan, leverage assistance programs, and stay tuned to CMS updates. With a few proactive steps, beneficiaries can protect their budgets while maintaining access to the medications they need.