Inflation Reduction Act

One main focus of the Act is to lower prescription drug costs for Medicare Part D beneficiaries through several key measures:  The Act caps annual out-of-pocket prescription drug costs for Medicare Part D beneficiaries at $3,500 in 2024 and $2,000 starting in 2025. This change is expected to benefit around 19,000 Colorado Medicare beneficiaries annually who otherwise would face higher costs.  In addition to the $2,000 cap on out-of-pocket prescription costs, the Act caps insulin prescription costs at $35 per month for Medicare beneficiaries. The Assistant Secretary for Planning and Evaluation (ASPE) estimates  that over 16,000 Medicare enrollees in Colorado who use insulin could have an average savings of $515 per year.  Across the United States, individuals are experiencing the impact of the Act on prescription drug prices, including Martha and Robin. Martha is a Medicare beneficiary in West Virginia who was diagnosed with Leukemia in 2019. She takes two pills a day to treat her condition, and in 2023, she spent $12,000 out-of-pocket on her medication. In 2024, she expects to pay $3,300 dollars due to the out-of-pocket prescription drug cost cap provision in the Act. Robin is a senior on Medicare from Missouri who relies on insulin. Previously she spent $9,000 a year on insulin and she now reports paying less than $900 a year due to the provision in the Act capping insulin costs at $35 dollars per prescription. The Act also addresses prescription drug prices by requiring Medicare to negotiate prices for high-cost drugs. This measure is anticipated to save billions of dollars for seniors, people with disabilities, and the federal government. This will mean savings for the over 100,000 Coloradans who take medications like Eliquis, Xarelto, Jardiance, Januvia, and Farxiga.  In an effort to curb increases in drug costs and ensure prices remain fair and predictable, the Act requires drug manufacturers to pay rebates to Medicare if they increase prices faster than inflation. The Act also addresses costs associated with certain vaccines, not previously covered under Medicare Part D, and starting in 2023, the Act eliminated out-of-pocket costs for recommended vaccines for Medicare Part D covered adults and eligible Medicaid and Child Health Insurance Coverage Program (CHIP) enrollees. In 2020, around 72,000 Coloradan Medicare Beneficiaries received a vaccine under Part D. The US Department of Health and Human Services reported that in 2021 alone 3.4 million people with Medicare paid $234 million in out-of-pocket costs for necessary vaccines, an average of $70 per person, with costs for certain vaccines like shingles previously reaching almost $200. The goal of this provision is to make recommended preventive vaccines more accessible and reduce cost burden on seniors.