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Medicare will begin capping prescription drug costs at $2,000 annually from January 1—a move that’s widely expected to benefit millions of Americans.
Why It Matters
Around 3.2 million Medicare recipients are expected to pay lower costs, especially seniors and people with diseases such as cancer who have multiple prescriptions or high-cost ones, according to the nonprofit AARP.
By 2029, these people are set to see savings of more than $1,000 with just over 420,000 of them looking at savings of more than $3,000.
What to Know
The yearly price cap has been set to come into force since the Inflation Reduction Act was signed into law by President Joe Biden in 2022.
It includes everyone with a Medicare Part D plan, which covers most pharmaceutical products, and people with drug plans through the privately offered plans under Medicare Advantage.
Drugs covered by the cap only include those listed on the Plan D formulary, or a plan’s list of covered drugs this means that some drugs prescribed by doctors, which are not on a formulary or list of covered drugs, will not be covered. The cap does not cover Part D premiums.
The new measure will also cover deductibles, copayments and coinsurance for qualifiable drugs.
AP
What People Are Saying
AARP said: “Medicare Part D originally did not include a limit on out-of-pocket spending. This left many enrollees, particularly those taking high-priced or multiple medications, exposed to the possibility of significant financial burdens.
“However, the Inflation Reduction Act of 2022 included a benefit redesign that caps enrollees’ annual out-of-pocket spending and ensures that they will no longer face the prospect of unlimited cost-sharing every year.”
The associate director of health coverage and benefits at the National Council on Aging, Ryan Ramsey, told CBS MoneyWatch: “Having a cap where somebody can know, ‘Hey, this is what my maximum out of pocket will be for my medication,’ that will be an enormous deal.”
What Happens Next
The new cap will come into effect from January 1, in one of several money-saving changes.
Some new rules from the Inflation Reduction Act have already come into effect, including a $35 price cap on insulin for seniors. The act specifically targets out-of-pocket expenses for Medicare beneficiaries. The legislative change has undoubtedly eased the financial burden for many who require insulin to manage diabetes.
According to a 2023 report from the Department of Health and Human Services, if the cap had been in effect in 2020, it would have saved Medicare beneficiaries an estimated $500 annually on insulin.