Biden's prescription drug cap could save millions of seniors $1,000 or more

More than three million Americans are expected to save money on prescription drugs next year when a new $2,000 cap on out-of-pocket costs for Americans with a Medicare drug plan takes effect in January.

By the end of the decade, the number of people benefiting from the cap will rise to over 4 million, according to a new report from AARP, the leading advocacy organization for America's seniors.

Around 56 million Americans are enrolled in Medicare's drug insurance plans. But because there is no cap on co-payments, many seniors still find it difficult to afford essential medications.

A study published in the scientific journal JAMA Network Open found that 1 in 5 American seniors have missed a dose or have not redeemed a prescription due to cost reasons.

“No person should face unaffordable prescription drug costs year after year,” said Leigh Purvis, AARP's drug policy director, in a press release. “This new law will provide relief to many people struggling with the impact of skyrocketing drug prices.”

The AARP report estimates that thanks to the price cap, about 1.4 million Americans will save an average of $1,000 or more in 2025. More than 420,000 Medicare beneficiaries will save more than $3,000.

The $2,000 cap was introduced in the Inflation Reduction Act (IRA), which AARP championed and President Joe Biden signed into law in 2022. The law also set a $35 monthly cap on the cost of insulin that Medicare beneficiaries must pay out-of-pocket. It also gave Medicare the ability to negotiate lower prices with drug manufacturers for drugs that accounted for the majority of the program's drug spending.

Vice President and presidential candidate Kamala Harris said this month that if elected, she would extend the IRA-imposed caps to all Americans.