Recent findings from an AARP report reveal that the list prices for the top 25 prescription drugs covered by Medicare Part D have, on average, almost doubled since their introduction to the market. This price escalation often surpasses the inflation rate, a concern highlighted by this organization, which represents individuals aged 50 and above.
Significantly, Medicare recently gained the authority to negotiate drug prices following the enactment of the Inflation Reduction Act in 2022, signed into law by President Joe Biden. However, not all medications qualify for these negotiations. In August, the Biden administration disclosed the first 10 drugs selected for negotiation, anticipating around $6 billion in net savings for Medicare by 2026. Additionally, the Centers for Medicare and Medicaid Services will announce a second list comprising 15 Part D drugs for 2027 by February.
AARP took a closer look at the top 25 Part D drugs from 2022, which aren’t currently under Medicare’s price negotiation scope. Leigh Purvis, the principal of prescription drug policy at AARP, indicated there’s a strong possibility some of these drugs might be included in future negotiations. The study found that these drugs experienced an average price increase of 98% since their market debut, with some seeing hikes as much as 293%. Notably, a significant portion of the current high list prices results from increases after these drugs were initially launched.
On average, these major drugs have been available for 11 years, with their lifespan ranging between five to 28 years. Purvis emphasized the crucial role of enabling Medicare to negotiate drug prices and the need to curb yearly price hikes. Under the Inflation Reduction Act, drug manufacturers will face penalties for any price increments exceeding the inflation rate.
Starting this year, a new $2,000 annual cap on out-of-pocket expenses for Part D prescription drugs takes effect. Beneficiaries can also opt to spread these costs throughout the year instead of paying all at once. Additionally, Medicare beneficiaries have their insulin costs capped at $35 per month.
According to Purvis, these measures are particularly beneficial for those who previously spent upwards of $10,000 annually on Part D drug costs. “Having a limit is incredibly important for them and everyone else,” said Purvis. “Everyone is just one expensive prescription away from exceeding their out-of-pocket limit.”
Moreover, the new regulations expand assistance for low-income Part D beneficiaries. Natalie Kean, director of federal health advocacy at Justice in Aging, noted, “We hear stories of people having to choose between splitting their pills to make them last or between groceries and prescriptions.” She emphasized that the financial burden of prescription drugs is a significant reality, especially for those on tight budgets striving to meet daily needs. As these changes roll out, retirees should start experiencing noticeable benefits when filling their prescriptions.
