A new prescription drug law, which took effect on January 1, 2023, is designed to provide significant financial relief to individuals with Medicare. This legislation enhances access to affordable medications and strengthens the overall Medicare program, particularly for those managing chronic conditions such as diabetes.
Key Features of the Law
Expanded Vaccine Coverage
Under the new law, individuals enrolled in Medicare Part D will no longer incur out-of-pocket costs for a broader range of vaccines. This includes vaccines that are recommended by the Advisory Committee on Immunization Practices, such as those for shingles and whooping cough. This change aims to encourage vaccination and improve public health outcomes among Medicare beneficiaries.
Insulin Cost Reductions
The law introduces substantial cost reductions for insulin, a critical medication for many individuals with diabetes:
- Part D Insulin Costs: Medicare Part D plans cannot charge more than $35 for a one-month supply of each covered insulin product. This cap applies without any deductible, meaning beneficiaries will pay $35 or less regardless of their financial situation. For those who require a three-month supply, the total cost cannot exceed $105.
- Part B Insulin Costs: For beneficiaries using insulin pumps covered under Medicare Part B, the cost for a month’s supply of insulin is similarly capped at $35, effective July 1, 2023. This provision also eliminates the need for a deductible.
These changes are expected to significantly reduce the financial burden on Medicare beneficiaries who rely on insulin.
Lower Out-of-Pocket Drug Costs
The law also aims to lower out-of-pocket expenses for certain drugs covered under Medicare Part B. If the prices of these drugs increase at a rate higher than inflation, beneficiaries may experience reduced coinsurance amounts. Starting in 2024, individuals who reach the catastrophic coverage phase in their Medicare drug plans will not be required to pay any copayment or coinsurance.
Additionally, the Part D Low-Income Subsidy (LIS) program will expand in 2024, providing further assistance to individuals with limited incomes. Those qualifying for Extra Help will pay no more than $4.50 for generic drugs and $11.20 for brand-name drugs.
A significant change is the introduction of a cap on annual out-of-pocket costs for Part D beneficiaries, set at $2,000 starting in 2025. This cap allows beneficiaries to manage their expenses better by enabling them to pay their out-of-pocket costs in monthly installments throughout the year.
Medicare’s Negotiation for Lower Drug Prices
For the first time, Medicare will have the authority to negotiate prices directly with pharmaceutical manufacturers for select high-cost brand-name drugs that lack competition. This negotiation process will begin with the first ten drugs, with prices set to take effect in 2026. The initial list of drugs includes well-known medications such as:
- Eliquis
- Jardiance
- Xarelto
- Januvia
- Farxiga
- Entresto
- Enbrel
- Imbruvica
- Stelara
- Fiasp and its variants
Looking ahead, Medicare plans to negotiate prices for additional drugs in subsequent years, including 15 drugs in 2025 and again in 2026, and 20 drugs each year thereafter. Manufacturers that do not comply with the negotiation requirements will face penalties.
Summary
- The new prescription drug law enhances vaccine coverage for Medicare beneficiaries.
- Insulin costs are capped at $35 per month for both Part D and Part B, effective January 1, 2023, and July 1, 2023, respectively.
- Out-of-pocket costs for certain drugs will decrease, with catastrophic coverage eliminating copayments starting in 2024.
- The Part D Low-Income Subsidy program will expand, and annual out-of-pocket costs will be capped at $2,000 from 2025.
- Medicare will negotiate drug prices for select high-cost medications, starting with ten drugs in 2026.