New Medicare drug price caps could help seniors save over $1,000 a year – AARP

More than one million people enrolled in Medicare drug plans are expected to save more than $1,000 a year starting in 2025, when a $2,000 annual cap on prescription drug copayments takes effect.

This is according to a report from the nonprofit AARP that details the savings from the new annual cap for the nation's 56 million Medicare drug plan enrollees. The report analyzes the number of enrollees who will benefit from the cap between 2025 and 2029 by state, age, gender and race.

The cap was introduced as part of the Inflation Reduction Act for the Medicare program for seniors and people with disabilities. The drug portion of Medicare Part D covers about 56 million people. President Joe Biden signed the Inflation Reduction Act of 2022.

Earlier this month, the U.S. government set final prices for the first ten Medicare Part D drugs negotiated under the Inflation Reduction Act. Merck's (MRK) diabetes drug Januvia was cut 79% from its 2023 list price, the steepest discount on a percentage basis.

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.

The AARP, which advocated for the law, estimates in its report that an estimated three to four million Part D plan enrollees will benefit from the new deductible cap each year between 2025 and 2029.

Medicare drug plan enrollees who meet the new out-of-pocket cap can save an average of about $1,100, or 56%, on their prescription drugs in 2025.

In addition, about 1.4 million (40%) of Medicare drug plan enrollees who reach the new deductible limit between 2025 and 2029 are expected to realize annual savings of $1,000 or more. Just over 420,000 (12%) will realize savings of more than $3,000, the report added.

According to AARP, the current design of Part D requires many insured people to pay more than $10,000 per year.

By 2029, the proportion of insureds benefiting from the new deductible cap is estimated to be 10% or more in 19 states and the District of Columbia.

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