Reed Touts $23M in New Savings on Rx Drugs for 68,000 RI Seniors

WASHINGTON, DC - Thanks to a new law that kicked in this month, Rhode Islanders with a Medicare prescription drug plan -- also known as Medicare Part D - are seeing their out-of-pocket prescription drug costs capped at $2,000 each year. And today, the Biden administration announced that Medicare will negotiate discounts with pharmaceutical companies on 15 more popular drugs prescribed to treat cancer, diabetes, asthma, and more. These drugs include: Ozempic/Wegovy/Rybelsus, Trelegy Ellipta, Xtandi, Pomalyst, Ibrance, Ofev, Linzess, Calquence, Austedo, Breo/Ellipta, Tradjenta, Xifaxan, Vraylar, Janumet and Otezla.

U.S. Senator Jack Reed says older Rhode Islanders with costly prescription medication should start to see some real relief at the pharmacy counter thanks to a provision of the Inflation Reduction Act (P.L. 117-169), a 2022 law Reed helped pass that phased in a new spending cap for Medicare beneficiaries. The average American who qualifies could save as much as $1,500 in out-of-pocket drug expenses, according to an analysis from AARP. And over the course of 2025, the Reed-backed law is expected to save about 68,000 Medicare Part D enrollees in Rhode Island a total of over $23 million.

"One of the biggest expenses for seniors on fixed incomes is prescription drug costs. I helped include provisions in the Inflation Reduction Act to lower the prices seniors pay at the pharmacy counter, making them healthier and more financially secure. The new $2,000 annual out-of-pocket drug price cap will deliver significant savings to thousands of Rhode Island seniors in 2025. This new benefit builds on other important cost-saving aspects of the Inflation Reduction Act, which President Biden signed into law. I will continue working to lower costs for seniors and prevent the incoming administration from repealing these cost-saving measures and allowing Big Pharma to hike prices on seniors to pad their profits. The cost of life-saving medications should be affordable and transparent," said Senator Reed.

Medicare Part D is a voluntary program that helps pay for prescription drugs for people with Medicare. Nationwide, Medicare covers about 66 million people in the U.S., and 50.5 million patients are enrolled in Part D plans.

Prior to the Inflation Reduction Act, some patients had to pay tens of thousands of dollars in prescription drug costs each year.

The Office of the Assistant Secretary for Planning and Evaluation (ASPE) recently released data projecting that approximately 11 million enrollees are expected to benefit from the $2,000 cap in 2025, collectively saving $7.2 billion, or about $600 per enrollee. Those without financial assistance could save even more, averaging $1,100 per enrollee.

Additionally, AARP commissioned a new report by consulting firm Avalere that found "an estimated 94 percent of all Part D enrollees expected to reach the $2,000 out-of-pocket cap in 2025 will have lower total out-of-pocket costs, saving an average of $2,474. This amount represents a 48 percent reduction in their total out-of-pocket costs. The analysis also found that, on average, 62 percent of the enrollees will save more than $1,000 and 12 percent will save more than $5,000."

The AARP report suggests the $2,000 price cap could be a huge benefit to Medicare enrollees who struggle to afford high-cost drugs for a variety of serious conditions. These older Americans and other U.S. patients pay two to three times more for prescription drugs than people in other developed nations.

The AARP-commissioned report also noted that millions more Americans are projected to benefit from the cap on out-of-pocket drug costs with each passing year, and significantly increase between 2025 and 2029.

The Inflation Reduction Act, which was approved by Congress without a single Republican vote, also included other key measures to help lower high prescription drug prices and health-related costs, including a new $35 monthly cap on insulin, access to free preventive vaccines, and empowering Medicare to use its purchasing power to negotiate lower prices directly with drug manufacturers.

In 2023, the Biden Administration unveiled the first ten prescription drugs that would have their prices lowered through negotiations by the Centers for Medicare and Medicaid Services (CMS). The first round included medications for blood clots, diabetes, arthritis and heart failure - such as Eliquis, Xarelto, Farxiga, Januvia, Stelara and Entresto. U.S. taxpayers saved an estimated $6 billion in the first year from the new, lower prices, which were negotiated down by as much as 79 percent. The 15 drugs added to the negotiating list today were used by about 5.3 million Medicare enrollees and cost Medicare about $41 billion, prior to rebates and discounts. Together, these 25 prescription drugs represent about a third of Medicare Part D spending on prescription drugs.

Drug companies will have until February 28, 2025, to decide on their participation in the negotiations. CMS will then consider various factors, including clinical benefits and the drugs' impact on specific populations, during the negotiation process.

If the lower negotiated prices go through, they will take effect in 2027. But the Trump Administration has not committed to lowering drug prices for seniors.

"No one should be driven into debt to pay for their prescription medicines. That's why I will continue looking out for older Americans and working to bring down costs for Medicare beneficiaries. The Trump Administration should continue to build on our hard won progress to lower health costs. If they fail to do so, they will be directly responsible for raising the price of prescription drugs on all Americans," concluded Senator Reed.

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