Medicare Recipients Can Save on Drugs in 2024

It’s the best news that few people seem to know about: Prescription drug costs are falling this year for more than a million seniors — in many cases, by thousands of dollars.

The lower costs are the result of the Inflation Reduction Act, or I.R.A., which was signed into law by President Biden in 2022 and is known mainly for its investment of more than $370 billion into climate and energy programs. Its changes to Medicare, which will help people who are enrolled in the prescription drug coverage plans known as Part D, are significant. Yet a recent survey by the nonprofit KFF found that most Americans weren’t aware of them.

The changes began last year with a $35 monthly cap on the cost of insulin for diabetes patients, and free vaccines. This year, an annual out-of-pocket cap of $3,300 will take effect, because people covered under Part D are no longer required to pay 5 percent of the cost of brand-name drugs once they reach that level of spending. Another provision penalizes drug companies for price increases that exceed the rate of general inflation. And the I.R.A. expands eligibility for financial assistance with Part D costs for low-income seniors.

The law has also authorized Medicare to negotiate prices for expensive drugs with pharmaceutical companies for the first time. The first negotiations will be over 10 drugs, including the blood thinners Eliquis and Xarelto and the diabetes drugs Jardiance and Januvia. The effect of those talks is uncertain, and they have already provoked litigation by drug makers.

The stronger vaccine coverage eliminates cost sharing for all of the many vaccines covered under Part D. Vaccines for Covid-19, the flu and some other conditions are covered under Part B (which covers outpatient care). Some shots previously had high out-of-pocket costs. For example, patients paid an average of $77 in 2021 for the vaccine that prevents shingles, according to federal data.

In 2025, there will be two more important changes: A beneficiary’s total out-of-pocket spending will be capped at $2,000, and people will be able to spread their out-of-pocket costs throughout the year by setting up a monthly payment plan with their Part D insurance companies.

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