Starting January 1, Older Adults on Medicare Will Have a New $2,000 Annual Cap on Prescription Drug Costs
Starting January 1, older adults on Medicare will spend no more than $2,000 a year on prescription drugs when a new price cap on out-of-pocket payments from the Inflation Reduction Act goes into effect.
Experts Say the Change is Expected to Provide Major Relief for Cancer Patients
Experts say the change is expected to provide major relief for cancer patients who often struggle to afford their medications due to the high cost of cancer drugs.
Diana DiVito, of Canonsburg, Pennsylvania, recalls the shock she felt after she got her first co-payment for the cancer drug Imbruvica in 2016.
The 83-year-old was diagnosed with chronic lymphocytic leukemia, a type of blood cancer that begins in the bone marrow, in 2005. She underwent treatment, including chemotherapy, and went into remission. When she had a recurrence, she started taking Imbruvica.
By 2021, DiVito had spent $56,000 out-of-pocket on the daily pill.
“The co-pays blew me away,” said DiVito, who added she’s been on limited income since her husband died in 2023. “It started out the first year was $8,500 out of pocket, and then it went up about $1,000 every year after that.”
Millions Expected to Benefit
The Inflation Reduction Act’s $2,000 price cap comes after years of public outcry about the soaring cost of prescription drugs, including cancer medications, in the United States.
The law introduced the cap gradually, starting with a cap of $3,250 on out-of-pocket spending on prescription drugs in 2024.
More than 65 million people, mainly older adults, are enrolled in Medicare. A study published in September in JAMA Network Open found that annual out-of-pocket costs for cancer medications averaged $11,284 for Medicare Part D beneficiaries in 2023.
Living on Fixed Incomes
Juliette Cubanski, deputy director of the Medicare policy program at KFF, a nonprofit group that researches health policy issues, noted that in the nearly 20 years since Medicare Part D was introduced, there has never been an annual cap on out-of-pocket costs.
She co-wrote an analysis that found about 1.5 million people on Medicare had out-of-pocket prescription drug costs exceeding $2,000 in 2021 and would have benefited from the cap. Of the 1.5 million, about 200,000 Medicare enrollees spent $5,000 or more for their prescriptions that year.
Is $2,000 a Year Still Too High?
George Valentine, 73, of Philadelphia, said he was at his annual physical in 2002 when his doctor noticed something unusual in his test results. Further testing revealed he had chronic lymphocytic leukemia.
The medications he needed came with a hefty price tag — around $14,000 a month. While he was working in the information technology industry, this wasn’t a major issue because his job-based health insurance included an out-of-pocket maximum, which he hit every year.
However, when Valentine retired in 2019, he discovered a significant gap in Medicare’s coverage. Unlike his previous insurance, Medicare had no out-of-pocket spending limit, leaving him responsible for 5% of his medication costs after reaching the catastrophic coverage phase.
Conclusion
The new price cap on out-of-pocket payments from the Inflation Reduction Act is expected to provide major relief for cancer patients who often struggle to afford their medications due to the high cost of cancer drugs. The cap is expected to benefit millions of people on Medicare and will apply to all prescription drugs under Medicare Part D.
FAQs
Q: Who will benefit from the new price cap?
A: Millions of people on Medicare, mainly older adults, will benefit from the new price cap.
Q: What is the new price cap?
A: The new price cap is $2,000 a year on out-of-pocket payments for prescription drugs under Medicare Part D.
Q: How will the price cap work?
A: The cap will apply to all prescription drugs under Medicare Part D and will not apply to drugs given in a health care setting, such as chemotherapy or anesthesia.
Q: Will the price cap benefit everyone on Medicare?
A: No, the price cap will not benefit everyone on Medicare. Those who spend less than $2,000 a year on prescription drugs will not benefit from the cap.
Q: Is the $2,000 price cap still too high?
A: Some experts argue that the $2,000 price cap is still too high and that a lower cap would be more beneficial to patients. However, the cap is expected to provide major relief for cancer patients who often struggle to afford their medications due to the high cost of cancer drugs.
