It’s Thumped - IRA

Through the Inflation Reduction Act, President Biden is delivering on his promise to lower prescription drug costs, make health insurance more affordable, and make the economy work for working families. This law means millions of Americans across all 50 states, the United States territories, and the District of Columbia will save money from meaningful benefits like:

lower prescription drug prices in Medicare through price negotiation with manufacturers,

a yearly cap ($2,000 in 2025) on out-of-pocket prescription drug costs in Medicare, and

continued lower health insurance premiums through HealthCare.gov and the state-based Marketplaces.

View a timeline showing when these changes happen in the Medicare, Medicaid and the Children’s Health Insurance Program, and Health Insurance Marketplace.

See frequently asked questions about reduced drug prices and enhanced Medicare benefits under the Inflation Reduction Act.

People with Medicare will benefit from lower prescription drug costs and a redesigned prescription drug program.

Before the Inflation Reduction Act, more than 5 million people with Medicare struggled to afford their prescription drugs. People with lower incomes and those under age 65 also are more likely to skip the medicine they need because of high costs.[1] The Inflation Reduction Act makes changes to Medicare so that millions of people with Medicare will spend less on their prescriptions.

Someone with Medicare who takes insulin covered by their prescription drug plan or through a traditional pump covered under Traditional Medicare will have access to each insulin for no more than $35 for a month’s supply. That person also won’t pay a deductible for their covered insulin products. The new rules begin January 1, 2023 for insulin covered under Medicare prescription drug plans and July 1, 2023 for insulin that is used through a traditional pump covered under Traditional Medicare’s durable medical equipment benefit. This change sets a cap on insulin cost-sharing that will benefit at least 1.4 million people with Medicare.

Starting in 2024, people enrolled in Medicare prescription drug coverage who have higher drug costs so that they reach the catastrophic phase of Medicare drug coverage will no longer have to pay cost-sharing toward their prescription drugs in the catastrophic phase.

Help affording prescription drug coverage for people with Medicare who have low incomes will be expanded starting in 2024 for certain individuals with limited resources who earn less than 150% of the federal poverty level. This change will help people enrolled in Medicare drug coverage be better able to pay their premiums and cost-sharing to fill prescriptions.

People with Medicare prescription drug coverage will benefit from a yearly cap ($2,000 in 2025) on what they pay out-of-pocket for prescription drugs, starting in 2025. They will also have the option to pay their prescription costs in monthly amounts spread over the year rather than all at once, beginning in 2025.

Medicare’s new ability to negotiate drug prices will mean that people with Medicare will have more access to innovative, life-saving treatments, and the costs will be lower for both them and Medicare.

Americans spend more than $1,500 per person every year on prescription drugs. Prices also tend to be far higher than in other countries. One of the main reasons for these higher drug costs is a lack of market competition.[2] The Inflation Reduction Act increases competition, which will lower the price of prescription drugs for people with Medicare.

The requirement for Medicare to negotiate prescription drug prices encourages drug makers to create new ways to do business so they can stay competitive. This competition helps find new treatments and ways of delivering medicines. This kind of negotiation isn’t new - the Departments of Defense and Veterans Affairs and the Indian Health Service have had the ability to negotiate drug prices for their health programs for decades. With the new law, Medicare will also finally be able to negotiate drug prices directly with manufacturers, ensuring people with Medicare pay lower costs on some of the costliest prescription drugs.