$2000 Annual Cap on prescription drug costs for Medicare

Sen. Patty Murray at podium, Rep, Kim Schrier at right
Photo courtesy 

From the office of U.S. Senator Patty Murray

On January 1, 2025 a new provision that Democrats in Congress got signed into law went into effect, capping out-of-pocket prescription drug costs for seniors with a Medicare prescription drug plan at $2,000 a year. 

On Thursday, U.S. Senator Patty Murray (D-WA), a senior member and former Chair of the Senate Health, Education, Labor and Pensions (HELP) Committee, joined U.S. Representative Kim Schrier, M.D. (D-WA-08) at Northaven Senior Living in Seattle to highlight the new costs savings for millions of seniors.

The new cap is thanks to the Inflation Reduction Act Democrats passed through Congress in 2022—that every single Republican voted against—and it means millions of seniors will pay significantly less for their prescription drugs this year, lowering costs for families and giving them more breathing room.

“Starting January 1st, anyone with a Medicare prescription drug plan—also known as Medicare Part D—now has their out-of-pocket drug costs capped at two thousand dollars each year.

"That’s because of a law Democrats passed—the Inflation Reduction Act—that did all sorts of things to lower health care costs and make it cheaper and easier for folks to get the medications they need,” said Senator Murray.

“As everyone knows, high drug prices come with other painful costs—like stress over how to make ends meet, or what bills to skip, in order to fill a prescription, or whether to take the risk of rationing medication. These are impossible choices that no one should ever have to make. But they’re the reality for so many people, and so many seniors especially.

"And make no mistake, when prescription drugs are too expensive for people to afford—that’s dangerous. Because even the best, most effective medication can’t do someone any good if they can’t afford to get it.”

Medicare Part D—a voluntary program that helps pay for prescription drugs for people with Medicare—provides prescription drug coverage for nearly 56 million Americans. 

• More than 4.5 million older Americans enrolled in Part D are estimated to benefit from the new out-of-pocket spending cap that took effect January 1, 2025. 
• Approximately 1.4 million Part D enrollees who reach the new out-of-pocket cap between 2025 and 2029 will see annual savings of $1,000 or more, and just over 420,000 will see savings of more than $3,000. 
• In Washington state, at least 70,000 seniors are expected to see these new savings—nearly $1,900 in 2025—and that number will steadily increase over time.

The $2,000 annual cap is just one of the many actions Democrats took to lower prescription drug costs in the Inflation Reduction Act. 

Most notably, the law capped the cost of insulin for patients on Medicare at $35/month—which went into effect January 1, 2023—and it empowered Medicare to negotiate lower prescription drug prices for the first time ever.

• In August, the Centers for Medicare & Medicaid Services (CMS) announced negotiated drug prices for ten commonly-used drugs in the first cycle of negotiations. The new, lower negotiated prices will go into effect on January 1, 2026, and will lower the prices people pay for some of the most common and expensive prescription drugs that treat heart disease, cancer, diabetes, blood clots, and more.
• Allowing Medicare to negotiate prescription drug costs is expected to save American taxpayers $6 billion, with people enrolled in Medicare expected to save $1.5 billion in out-of-pocket costs in 2026 alone. 15 to 20 more drugs will be added to the negotiating table every year moving forward – all thanks to Democrats’ Inflation Reduction Act.