How the inflation reduction act will continue to reduce drug costs in 2024

Inflation Reduction Act, IRA, happy senior woman smiling with green background

It’s always nice to have something to look forward to, and with the historic Inflation Reduction Act (IRA) legislation that passed in summer 2022, there is a lot of prescription drug savings changes to look forward to for all people with Medicare, and especially those with lower incomes. These changes started in 2022 with the passage of IRA and go through 2029.

What Rx cost-saving changes Have Happened in 2023 & What can we look forward to in 2024?

The year 2023 has already had some great prescription drug savings due to the IRA, including:

  • Capping insulin at $35 a month with no deductible for people in a Part D prescription drug plan. This started in January 2023. AND as of July 1, 2023, people with Traditional Medicare who take insulin through a traditional pump will not pay more than $35 for a month’s supply of insulin, and the deductible will not apply to the insulin. This will apply to people using pumps covered through the durable medical equipment benefit under Part B.
  • Expanding free vaccine coverage for all vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) to people with Medicare. This started January 1, 2023.
  • Lowering coinsurance for some Part B drugs for people on Original Medicare if the drug’s price increased faster than the rate of inflation in a benchmark quarter. This started April 1, 2023.
  • Lowering drug prices by requiring Medicare to negotiate drug prices for certain high priced drugs under Medicare Part D or Part B. By September 1, 2023, the Centers for Medicare and Medicaid Services (CMS) will announce the first 10 Medicare Part D drugs selected for the Drug Price Negotiation Program. Maximum fair prices negotiated for these first 10 Part D drugs will go into effect in 2026.
  • Requiring prescription drug manufacturers to pay rebates to the government if they raise the price of a Part D or Part B-covered drug above the inflation rate. January 1, 2023 was the start of the first quarter for which drug manufacturers are required to pay rebates to Medicare if prices for certain Part B drugs increase faster than the rate of inflation.

The year 2024 has some more savings coming to look forward to. These include:

  • Expanding eligibility for the full low-income subsidy benefit—known as the Extra Help program—to people with limited resources and incomes up to 150% of the federal poverty level, or $21,870 per year – PDF in 2023 who meet eligibility criteria. People with incomes between 135% and 150% FPL who previously qualified for the partial subsidy will now have the full subsidy with lower co-pays and no deductible. This expansion is especially helpful in that it targets those who have the hardest time paying for needed medications, particularly older adults of color who make up a disproportionate share of Medicare beneficiaries with income below 150% FPL. It will provide substantial additional financial support to the more than 400,000 low-income people who currently have only partial subsidies (see Justice in Aging’s fact sheet – PDF). It will also simplify the Extra Help program and streamline eligibility, reducing enrollment barriers for thousands more people who are eligible but not currently enrolled.
  • Eliminating coinsurance and copayments during Medicare Part D’s catastrophic phase. As of January 1, 2024, people with Medicare Part D drug coverage who fall into the catastrophic phase of the drug benefit won’t have to pay any coinsurance or co-payments during that phase for covered Medicare prescription drugs.
  • Requiring Part D premium stabilization. The IRA provides for a mechanism beginning January 1, 2024 for the average premium increase across most Part D plans to be limited to 6% over the previous year. This protection continues through 2029. The law also provides for a mechanism to stabilize plan premiums in 2030 and subsequent years.

For a full overview of all the Inflation Reduction Act changes that lower prescription drug costs being implemented from 2022 through 2029, see CMS’ Inflation Reduction Act Implementation Timeline (PDF). Also, for more information, see CMS’ recently released fact sheet, Biden-Harris Administration Announces New Tools to Lower Prescription Drug Costs for Low-Income Seniors and People with Disabilities.

Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.