New Medicare drug price caps could help seniors save over $1,000 a year – AARP
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More than 1 million people enrolled in Medicare prescription drug plans are expected to save over $1,000 a year beginning in 2025, when an annual $2,000 cap on prescription drug out-of-pocket costs goes into effect.
That’s according to a report by nonprofit organization AARP detailing the savings from the new annual cap for the nation’s 56M Medicare drug plans enrollees. The report analyzes the number of enrollees that will benefit from the cap by state, age, gender, and race between 2025 and 2029.
The cap was introduced as part of Inflation Reduction Act for the Medicare program for seniors and those with disabilities. Medicare’s Part D prescription drug component covers around 56M people. President Joe Biden signed the Inflation Reduction Act into law in 2022.
Earlier this month, the U.S. government set the final prices for the first 10 Medicare Part D drugs negotiated under the Inflation Reduction Act. Merck’s (MRK) diabetes medication Januvia faced a 79% price cut from the 2023 list price, marking the steepest discount in percentage terms.
Blockbuster therapies from Bristol Myers (BMY), Pfizer (PFE), Eli Lilly (NYSE:LLY), AbbVie (ABBV), Johnson & Johnson (JNJ), Bayer (OTCPK:BAYZF), AstraZeneca (AZN), Novartis (NVS), Amgen (AMGN), and Novo Nordisk (NVO) (OTCPK:NONOF) are also part of the list.
AARP, which lobbied in favor of the law, suggests in its report that between 3 and 4 million Part D plan enrollees are estimated to benefit from the new out-of-pocket cap every year between 2025 and 2029.
Medicare drug plan enrollees who reach the new out-of-pocket cap will see average savings of roughly $1,100, or 56%, in 2025 for their prescription drugs.
Furthermore, around 1.4M (40%) Medicare drug plan enrollees who reach the new out-of-pocket cap between 2025 and 2029 are estimated to see annual savings of $1,000 or more. Just over 420,000 (12%) will see savings of more than $3,000, the report adds.
The current Part D design required many enrollees to pay out-of-pocket costs that exceeded $10,000 per year, AARP said.
By 2029, the share of enrollees benefiting from the new out-of-pocket cap is estimated to be 10% or higher in 19 states plus the District of Columbia.
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