S. 1186 — Lower Drug Costs for Families Act

This section revises the prescription drug inflation rebate requirements for Medicare Part B rebatable drugs (under SSA §1847A(i)) and Part D rebatable drugs (under SSA §1860D–14B) to incorporate billing units furnished in the commercial market (excluding Medicaid units) in calculating total units for rebate benchmarks and changes the base period from calendar year 2021 to 2016. For Part B drugs, the revisions (1) replace references to "units" with "billing units"; (2) define total billing units as total manufacturer-reported units for the relevant prior quarter minus Medicaid units under title XIX, converted to billing units using the Part B payment methodology; and (3) change base dates in paragraphs (3)(D) and (4) to July 1, 2016 (from July 1, 2021), January 2016 (from January 2021), and December 31, 2015 (from December 1, 2020). The changes apply to calendar quarters beginning on or after January 1, 2026. (As background, these rebates require manufacturers to remit payments to Medicare if a drug's average sales price exceeds the inflation-adjusted price from the base period, multiplied by Part B utilization; incorporating commercial units expands the benchmark to reflect broader market pricing.) For Part D drugs, the revisions (1) base total units on average manufacturer price units reported under SSA §1927, excluding Medicaid units, Part B inflation rebates, and (beginning plan year 2026) 340B discounts; (2) specify use of manufacturer §1927 data and State rebate reports; and (3) change base dates in subsections (b)(5) and (g) to October 1, 2016 (from October 1, 2021), January 1, 2016 (from January 1, 2021), January 2016 (from January 2021), and October 1, 2016 (from October 1, 2021). The changes apply to applicable periods (generally plan years) beginning on or after October 1, 2025. (Thus, shifting the base period five years earlier and broadening unit counts to commercial sales likely increases rebate amounts due to greater price growth since 2016.)