Biden's cap on drug costs will save US seniors over $1,000 a year, study says

By Ahmed Aboulenein

WASHINGTON (Reuters) – More than a million people in the United States will save more than $1,000 a year starting in 2025 if a $2,000 annual cap on prescription drug copayments is introduced, the leading lobby group for older Americans said on Wednesday.

The cap, introduced as part of President Joe Biden's inflation reduction bill, applies to the Medicare program for people ages 65 and older and those with disabilities. The prescription drug portion, known as Part D, provides coverage for about 56 million people.

AARP, which advocated for the law, commissioned health consulting firm Avalere to conduct a study on the new benefit and released a report on the results on Wednesday.

The $2,000 cap will lower prices in 2025 for more than 3.2 million people, or about 8.4 percent of Part D beneficiaries who do not receive other subsidies, AARP said in its report.

This is a significant difference from how Medicare Part D worked before. Before the Inflation Reduction Act, beneficiaries who were not eligible for low-income subsidies had to pay 5% of the cost of their medications themselves, regardless of how much they had already paid.

By 2029, the lowered cap will help 4.1 million people, or about 9.6 percent of beneficiaries, AARP said.

The greatest impact will be felt by those who most frequently use expensive brand-name drugs.

Nearly 40 percent of people who reach the cap over those five years (about 1.4 million) will save more than $1,000 a year, including 420,000 people, or about 12 percent, who will save more than $3,000 a year. Currently, some patients pay more than $10,000 a year, AARP said in its report.

Part D beneficiaries, who receive only small income subsidies and pay only small amounts for medications, were excluded from the study analysis.

“With the money that seniors no longer have to spend out of pocket, they can invest in their families or broader healthcare needs, or simply save to achieve greater financial stability,” said Jo Ann Jenkins, CEO of AARP.

(Reporting by Ahmed Aboulenein; Editing by Bill Berkrot)