The Good:
The intention behind the act was to reduce drug spending by the federal government and lower prescription drug costs for the Medicare consumer.
In 2023, insulin purchased through Advantage or stand-alone D plans cannot cost more than $35 for a monthly supply.
Vaccines recommended by the Advisory Committee on Immunization Practices and administered under the benefit of Part D removed cost-sharing requirements (including shingles vaccine).
As of June 2024, three million Medicare enrollees have benefited from the expansion of low-income subsidies (LIS). With incomes less than 150% of poverty ($22,590 single/ $30,660 family), the eligible receive full LIS versus the partial benefits of years past. This now means no Rx premiums, no Rx deductibles and low-to-no co-payments for prescriptions within the new income corridor.
Beginning in 2025, $2,000 will be the maximum that any enrolled beneficiary will spend for their prescriptions – substantial savings for Part D enrollees using costly brand-name drugs!
The math: Once the deductible phase of $590 has been met, Rx claims will accumulate by way of tiered co-payments that track toward the new annual maximum ($590 + $1,410 = $2,000).
The Not-so-Good:
Good intentions yield unruly consequences. The act has granted Health and Human Services the power to negotiate drug prices directly with their maker.
In 2026, 10 specific drugs under Part D without generic or biosimilar competitors have been targeted: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and NovoLog/Fiasp. Eight of these medications have already had price increases in 2024.
Mounting pressures will continue to erupt at the pharmacy as affected consumers meet the pharmacist and the crew behind the counter. The National Community Pharmacists Association revealed in a survey that “more than 90% of independent pharmacists may not sell drugs for which the Part D program is trying to negotiate lower prices” as reimbursements from Pharmacy Benefit Managers (PBMs) are slowing.
Insurers, by way of PBMs, will also continue to steer the masses away from using expensive brand-named medications (as seen on TV) to less costly generic substitutions and treatments, if available. Prior authorizations, step therapy and strict quantity limits will continue to rise.
Rapid changes to a drug’s tier placement may become commonplace. Each quarter a medication has the possibility to jump to a new tier or copay level. With all Rx roads leading to $2,000, consumers may end up spending the max “sooner” rather than later.
Furthermore, Advantage plans that have Part D “built in” have shifted their deck. In early 2024, Cigna sold its Medicare business to Health Care Service Corp (HCSC) for $3.7 billion. Other major insurers are feeling the pressure such as Humana’s exit in 13 markets. Likewise, stand-alone Prescription Drug Plans (PDP) are at an all-time low since Part D’s inception in 2006. PDP choices have narrowed to less than 15 per state. Included in the 2025 lineup, “no premium” drug plans.
In 2025, there will be an option for a beneficiary to pay for their medications in monthly installments, known as “smoothing.” This Medicare Prescription Payment Plan, through which beneficiaries’ Part D maximum can be “smoothed” over the course of a year, means a no-premium plan now becomes $2,000/12 = $166.67 per month.
The Ugly:
Price tag.
Per Kaiser Family Foundation (KFF.org), “the Congressional Budget Office (CBO) estimated that spending on Part D benefits would total $137 billion in 2025, representing 15% of total Medicare outlays.” Furthermore, the website says, “based on actual bid data submitted by Part D plans for coverage in 2025, CBO estimates higher federal spending on Part D of between $10 billion and $20 billion relative to its initial projections.”
The IRA impact within the prescription drug landscape will continue reach far and wide this next year. Changes to some of its major components will most likely occur within the first 100 days of the new administration … yet this may not be felt until 2026.
Being prepared is the best medicine. Seek unbiased guidance and understand where potential benefits may deflate, where liabilities may shift and how that may affect your circumstances and future care. Read the fine print. Do it often.
The Wise:
Realize that prescriptions may be harder to swallow in the days ahead.
