Prescription Drug Benefits

Prescription drug prices are a top concern for policymakers and the public, but little data is available on prescription drug prices or other costs that contribute to premiums for commercial drug coverage.

In November 2024, the Centers for Medicare & Medicaid Services (CMS) released the Medicare Program; Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly proposed rule.

The Inflation Reduction Act established a limit on out-of-pocket spending (“the 2024 cap”) for enrollees with very high prescription drug spending in Medicare Part D, for the first time in the history of the program.

The cost of bringing a medical product to the U.S. market has been increasing and clinical trials constitute a large portion of these costs. In drug development, the clinical phase lasts an average of around 95 months compared to 31 months for the non-clinical phase and accounts for 69 percent of overall R&D costs (DiMasi, et al., 2016).

The Inflation Reduction Act (IRA) makes improvements to Medicare to increase accessibility and affordability of prescription drugs for Medicare enrollees, reduce the rate of growth in Medicare drug spending, and improve the financial sustainability of the Medicare program.

Effective January 1, 2023, the Inflation Reduction Act (IRA) eliminated cost sharing and deductibles for adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) covered under Medicare Part D. In 2023, 10.3 million Medicare Part D enrollees received a recommended vaccine free of charge, which saved enrollees more than $400 million in out-of-pocket costs.

The Inflation Reduction Act (IRA) is helping people with Medicare, including nearly 30 million women enrolled in Part D. Our review shows that, in 2020, about 733,000 women enrolled in Part D and B would have benefited from the IRA’s $35 insulin cap and, in 2021, about 2 million women would not have had any out-of-pocket costs for recommended adult vaccines covered by Part D.

In 2022, 43.3 million Medicare Part D enrollees (82 percent) filled 1.1 billion prescriptions for generic prescription drugs. While most enrollees filled at least one prescription for $2 or less, most (54 percent) paid more than $2 for at least one generic drug. Over 6 million enrollees filled at least one prescription for over $20.

The Inflation Reduction Act (IRA) is helping people with Medicare, including over 8 million Part D enrollees who reside in rural areas. This fact sheet outlines the potential impacts of the IRA’s key drug-related provisions for rural Medicare enrollees.

The Inflation Reduction Act’s (IRA) expanded financial assistance in Medicare’s Low-Income Subsidy (LIS) Program would have benefited nearly 461,000 Partial LIS enrollees had the provision been in effect in 2020. An additional 2.9 million Part D enrollees who were eligible but not enrolled in LIS would also have benefited from the program.