Why GAO did this study. Medicare Part D drug expenditures exceeded $200 billion in 2021. Part D plan sponsors may negotiate rebates from drug manufacturers, where manufacturers offer payments to sponsors in exchange for access to a plan’s formulary. Manufacturers may offer higher rebates in exchange for lower beneficiary cost-sharing or facing fewer competitors. Policymakers have sought better understanding of rebates’ effects on Part D spending and beneficiary access. GAO was asked to examine rebates in the Part D program. This report, among other objectives, describes (1) rebate and expenditure information for Part D drugs and (2) implications of rebates on plan sponsors and beneficiaries. GAO also assessed how CMS considers rebate data in its oversight of Part D formularies. GAO analyzed CMS drug expenditure and rebate data for Part D drugs in 2021 (the data most recently available at the time of our analysis); reviewed CMS documentation; and spoke with CMS officials, plan sponsors, and manufacturers. What GAO recommends. The Administrator of CMS should monitor the effect of rebates on plan sponsor formulary design and on Medicare and beneficiary spending to assess whether rebate practices are likely to substantially discourage enrollment by certain beneficiaries. The Department of Health and Human Services did not concur with GAO’s recommendation. GAO believes the recommendation could help ensure compliance with Part D requirements.
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