Medicare Patients Face Higher Drug Costs Despite $2,000 Spending Cap

Health plans that provide prescription drug benefits to Medicare beneficiaries have responded to the Inflation Reduction Act’s $2,000 cap on out-of-pocket costs for prescription drugs by raising patient cost-sharing through higher deductibles and a greater reliance on coinsurance, finds a new study recently published in JAMA Internal Medicine.

The Inflation Reduction Act (IRA), signed into law in 2022, was designed to protect patients from catastrophic drug costs, with about 11 million beneficiaries — roughly one in five Part D enrollees — expected to reach the $2,000 spending threshold. But researchers from Brigham and Women’s Hospital and Harvard Medical School found that Medicare Advantage and stand-alone Part D plans have made design changes that could increase costs for patients who don’t reach the $2,000 cap.

“The Inflation Reduction Act included important reforms to improve prescription drug affordability. These included a $2,000 annual out-of-pocket cap, which will most benefit individuals taking expensive medications,” lead author Christopher Cai, M.D., Internal Medicine at Brigham and Women's Hospital, told Managed Healthcare Executive. “Our study suggests that insurers responded by increasing deductibles and cost-sharing for expensive medications, effectively spreading the cost of implementing the IRA across the broader patient pool.”

As a result, some patients who do not reach the $2,000 cap could experience higher out-of-pocket costs in 2025, Cai said. He is also a research fellow with the Program On Regulation, Therapeutics, And Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital.

The study analyzed data from 2019 to 2025, covering more than 38 million Medicare beneficiaries. Researchers calculated costs for nine commonly used, expensive brand-name medications, including diabetes drugs and blood thinners. They used the Medicare Part D Drug Spending Dashboard to identify the nine drugs by total annual spending in 2022, which researchers said is the most recent year available at the time of the study. Researchers used the wholesale acquisition costs per 30-day supply, which they obtained from the Eversana pharmaceutical pricing database and the First Databank.

Researchers calculated monthly premiums and annual deductibles from 2019 to 2015. They measured trends in the percentage of beneficiaries subject to coinsurance, as well as the mean co-payment and coinsurance amounts by tier.

Researchers found in Medicare Advantage plans:

• Monthly out-of-pocket costs for the drugs studied remained relatively stable from 2019 to 2024, ranging from $46 to $55, but jumped to $73 in 2025.
• Average deductibles fell from $153 in 2019 to just $66 in 2024, then jumped to $228 in 2025. The proportion of beneficiaries paying zero deductibles dropped from 77.2% in 2024 to 39.7% in 2025.
• Mean deductibles increased in 2025 for Medicare Advantage plans from UnitedHealthcare, Humana, and Aetna but not for Cigna or Kaiser
• The percentage of enrollees subject to coinsurance in Medicare Advantage plans surged from less than 3% between 2019 and 2024 to nearly 28% in 2025.
• As an example of how a specific drug was impacted, researchers cited Jardiance (empagliflozin), which is used to treat patients with Type 2 diabetes. Mean monthly out-of-pocket costs for Jardiance ranged from $44 to $46 from 2019 to 2024 but then increased to $69 in 2025.

In stand-alone Part D plans,

• Monthly out-of-pocket costs for the drugs studied increased from $62 monthly in 2019 to $108 in 2025.
• Deductibles for brand-name drugs rose from $295 in 2019 to $490 in 2025.
• The proportion of beneficiaries paying coinsurance for the drugs studied increased from 22% in 2019 to 84% in 2025
• Shifts to coinsurance varied by insurer. For example, many Aetna and Humana enrollees saw a shift to coinsurance for tier 3 and tier 4 products in 2024 and 2025, but those in UnitedHealthcare, Kaiser and Cigna did not.
• Mean monthly out-of-pocket costs for Jardiance ranged from $58 to $73 from 2019 to 2024 and then increased to $119 in 2025.

Researchers said the cap will benefit patients with high drug spending, but their findings raise concerns about increased costs for beneficiaries who will not reach the $2,000 cap.

“It will be important for these patients to shop for plans that best suit their needs and to consider enrolling in the Medicare Prescription Payment Plan, which smooths out-of-pocket costs across the calendar year,” Cai said. “Policymakers could build on the important progress made by the IRA by increasing the generosity of the standard Medicare Part D benefit or expanding Medicare price negotiation to reduce prescription drug prices.”