evidence: Medicare lacks a mechanism for limiting price increases in Part B physician-administered drugs and Part D retail prescription drugs. Some policymakers have proposed an inflation-based penalty that would require drug manufacturers to pay a rebate to Medicare when a drug’s price rises faster than the consumer price index (CPI-U).1 [...] Over the past 20 years, price increases for brand-name drugs in Medicare Part D have risen at more than twice the rate of inflation. In 2021, drug manufacturers increased prices an average of 4.2 percent on more than 900 brand-name drugs, a new record. Between 2018 and 2019, half of drugs covered by Part D plans had a price increase that exceeded inflation (which was 1.8%). Some increases were as large as 19.7 percent. [...] An inflation-based rebate penalty in Medicare would lead to federal savings of $36 billion for H.R. 3 and $82 billion for S. 2543 over 10 years, according to CBO. These savings would include a reduction in spending for the Medicare program and a modest gain in tax revenues that would result from employers shifting insurance premium savings into taxable wage increases for their employees.