The Inflation Reduction Act (IRA) was signed into law on August 16, 2022, and has significant impacts on the Medicare Part D program. The IRA aims to lower prescription drug costs and make health insurance more affordable. Patients may benefit from lower prescription drug prices in Medicare through price negotiation with manufacturers and a maximum cost on certain medications.

There have been significant changes since the passing of the law and further plans for Part D redesign in the future.

• Previously, patients continued to pay 5% of drug costs in the catastrophic phase for the rest of the year. With the IRA, patients have a $0 copay for all medications in the catastrophic phase, which was implemented at the beginning of 2024.
• Starting in 2025, there will be a yearly cap of $2,000 for members on out-of-pocket prescription drug costs.
• Beginning in 2025, patients will also have the option to pay their prescription costs in monthly amounts spread over the year rather than all at once.
• The IRA also places a maximum monthly cost of $35 for insulin for all Medicare patients.
• Additionally, there are limits to premium increases on health plans, mandated coverage for adult vaccines recommended by the Advisory Committee on Immunization Practice (ACIP), and expansion of the low-income subsidy program.¹

Chart #1:

Under the new benefit in 2025, there will be three phases of Part D instead of four:

1. Deductible phase
2. Initial coverage phase
3. Catastrophic phase

The coverage gap phase will be eliminated.²

Chart #2:

Chart #3:

Chart #4:

Patients move through these phases of coverage at different times, depending on their medications and health plan design. With the changes in coverage phases, patients may go from paying roughly $47 for a 30-day supply of medication to paying a coinsurance of a couple of hundred dollars. This price change can lead to issues in affordability, adherence, and disease state management.

Hyperlinked footnotes:

1 – The Inflation Reduction Act Lowers Health Care Costs for Millions of Americans | CMS

2 – Draft CY 2025 Part D Redesign Program Instructions Fact Sheet | CMS

3 – Phases of Part D coverage – Medicare Interactive