New AARP Report Reveals Price Surge of Top 25 Medicare Part D Prescription Drugs

According to a recent AARP report, the list prices for the top 25 prescription drugs covered by Medicare Part D have nearly doubled since their market introduction. The report highlights that these price increases have often surpassed the rate of inflation, affecting American seniors. This analysis comes in the wake of the Inflation Reduction Act, which has granted Medicare the power to negotiate prescription drug costs since its signing into law by President Biden in 2022.

Price Negotiation Authority

Notably, only certain drugs are eligible for negotiation. Subsequently, in August, the Biden administration released a list of the first 10 drugs to be included, expected to generate an estimated $6 billion in net savings for Medicare by 2026. Furthermore, the Centers for Medicare & Medicaid Services are set to announce the list of 15 Part D drugs selected for negotiation for 2027 by February 1. AARP examined the top 25 Part D drugs as of 2022 that are currently not subject to Medicare price negotiation. However, there is a significant likelihood that at least some of these drugs may be selected in the subsequent line of negotiation, according to Leigh Purvis, prescription drug policy principal at AARP.

Substantial Price Increases

The research reveals that the average price of these 25 drugs has surged by 98% since their market entry, with lifetime price increases ranging from 0% to 293%. AARP emphasizes that a substantial portion of the current list prices is attributed to price increases post the market launch. On average, the top 25 treatments have been on the market for 11 years, with a range spanning from five to 28 years. These findings underscore the necessity of permitting Medicare to negotiate drug prices and implementing a mechanism to deter annual price increases, as asserted by Purvis. Under the Inflation Reduction Act, drug companies will face penalties for price increases that exceed inflation.

Out-of-Pocket Cost Caps

This year marks the implementation of a $2,000 annual cap on out-of-pocket Part D prescription drug costs, providing relief to beneficiaries. Additionally, beneficiaries will have the option to spread out these costs over the year, avoiding a lump-sum payment. Medicare beneficiaries will also benefit from a $35 cap on insulin costs per month. The introduction of these caps is particularly significant for individuals previously spending over $10,000 annually on Part D prescription drug cost-sharing, as emphasized by Purvis. The existence of a limit is deemed crucial not only for those facing high costs but also for the general population, as everyone is potentially one expensive prescription away from exceeding the out-of-pocket cap.

Support for Low-Income Beneficiaries

The new legislation also expands assistance programs for Part D beneficiaries with low incomes. The impact of rising prescription drug costs on individuals with limited financial resources has been emphasized, with reports of people having to make difficult choices between groceries and filling prescriptions or even splitting pills to extend their usage. The expansion of support programs aims to alleviate this burden on low-income individuals striving to meet their daily needs, as highlighted by Natalie Kean, director of federal health advocacy at Justice in Aging. Kean expects retirees to notice tangible differences when filling their prescriptions as these changes take effect.