What's New
In 2025, more than 850,000 Americans with Medicare will benefit from lower prescription drug costs as part of the Inflation Reduction Act.
In a Friday announcement, The U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), said that 64 drugs covered by Medicare Part B will be subject to reduced coinsurance rates from January 1 through March 31, 2025.
The affected drugs treat serious conditions, including cancer, osteoporosis, and substance use disorder, and some people with Medicare who use these drugs in the first quarter of 2025 may save between $1 and $10,818 per day.
Newsweek has emailed HHS for comment.
Why It Matters
Research by KFF has found that 1 in 3 U.S. adults are unable to afford taking their medication as prescribed. The Inflation Reduction Act of 2022, signed by President Biden on August 16, 2022, introduces key measures aimed at lowering prescription drug costs for Medicare beneficiaries and reducing federal drug spending. According to 2023 analysis by AARP, the 25 drugs with the highest aggregate Medicare spending have more than tripled in list price since entering the market.
What To Know
The law also introduces significant systemic changes, such as capping annual out-of-pocket prescription drug costs at $2,000 for Medicare Part D enrollees starting January 1, 2025. This cap is expected to save billions in out-of-pocket costs and provide critical financial relief for seniors and other Medicare users.
Meanwhile, Medicare users will be able to spread their out-of-pocket costs throughout the year, making expenses more manageable with predictable monthly payments.
This legislation comes in response to widespread bipartisan and public support for tackling the issue of escalating drug prices. In July 2023, the Center for American Progress reported that drug companies increased the list prices of 112 medications by more than the annual inflation rate of 3 percent. These list prices, set by manufacturers, apply to all payers and do not include any rebates or discounts within the drug pricing system.
According to the HHS, under the plan, some people with Medicare who use these drugs in the first quarter of 2025 may save between $1 and $10,818 per day. For example, a Medicare beneficiary taking Atgam, a drug used to treat aplastic anemia, could save as much as $12,728 during the three-month period in early 2025, depending on their coverage and treatment plan, according to HHS.
The announcement is part of the government's ongoing Medicare Prescription Drug Inflation Rebate Program, which mandates that drug companies provide rebates to the Centers for Medicare & Medicaid Services when the prices of certain medications rise faster than the rate of inflation.
The makers of these 64 prescription drugs will be invoiced for the rebates they owe Medicare no later than the fall of 2025. These funds will be deposited in the Federal Supplementary Medical Insurance Trust Fund, which HHS says will help to ensure the financial sustainability of the Medicare program for generations.
Among the drugs affected are Merck's Zerbaxa, Johnson & Johnson's Talvey, Bristol Myers' Abecma, Astellas Pharma Inc.'s Cresemba, and Amgen Inc.'s Evenity.
These medications are primarily administered in clinical settings, such as doctor's offices and hospitals.
What People Are Saying
HHS Secretary Xavier Becerra said in a press release: "The Inflation Reduction Act is working to lower prescription drug costs for millions of people. By discouraging drug companies from raising their prices faster than inflation, we are keeping prices affordable for the people with Medicare who rely on these drugs to live healthier lives. The law has also capped out-of-pocket costs and finally allows Medicare the right to negotiate lower prices. It is a success story for the American people."
White House Domestic Policy Advisor Neera Tanden said in a press release: "For too long, Americans have faced the difficult choice of paying for their prescription drugs and being able to afford other basic needs. Thanks to President Biden, that's changing. Under the Inflation Reduction Act, companies that increase the price of prescription drugs faster than inflation must provide a rebate to Medicare. That means lower drug costs, and more money back into the pockets of Americans with Medicare."
CMS Administrator Chiquita Brooks-LaSure said in a press release: "The Inflation Reduction Act is lowering prescription drug costs so that people can access the medications they need. As we head into 2025, people with Medicare will feel substantial relief from high drug prices. In addition to lower cost-sharing for certain drugs whose prices have increased above the rate of inflation, people with Medicare prescription drug coverage will have their annual out-of-pocket costs capped at $2,000 for the first time. This will be life-changing for people who have been living with high drug costs."
What Happens Next
More prescription cost cuts could be coming in 2026. Medicare is currently negotiating to lower the prices of selected prescription medications. The first 10 negotiated prices will take effect in 2026, with more to follow in the future.
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