Starting Jan. 1, when the Inflation Control Act’s new out-of-pocket price caps go into effect, seniors on Medicare will spend less than $2,000 a year on prescription drugs.
Experts say the changes are expected to bring significant relief to cancer patients who often struggle to afford drugs due to their high prices.
Diana DiVito of Canonsburg, Pennsylvania, recalls the shock she felt when she received her first co-pay for the cancer drug Imbruvica in 2016.
The 83-year-old was diagnosed with chronic lymphocytic leukemia, a type of blood cancer that starts in the bone marrow, in 2005. She underwent chemotherapy and other treatments and went into remission. When she relapsed, she started taking Imbruvica.
So far in 2021, DiVito has spent $56,000 out of pocket on daily medications.
“I was shocked by the out-of-pocket costs,” said DiVito, who added that she has had limited income since her husband died in 2023. “My out-of-pocket cost was $8,500 the first year, and it went up about $1,000 every year after that.” “
Diana DiVito, 83, was prescribed Imbruvica in 2016 and spent $8,500 out of pocket in the first year. (Courtesy of Diana DiVito)
The new price cap applies to all prescription drugs under Medicare Part D. It does not apply to drugs administered to patients in hospitals or other medical settings, such as chemotherapy or anesthesia. Medicare beneficiaries will also have a new option to pay their out-of-pocket costs in installments over the year, rather than paying them all at once.
Before the change, people on Medicare had to pay more than $7,000 out-of-pocket for prescription drugs before they could qualify for so-called disaster coverage, which covers most drug costs. Under this insurance, patients are charged a small co-payment, or a percentage of the drug cost (usually 5%).
Typically, DiVito would be hit with devastating press coverage right after resetting his plans every January. This covered my expenses for most of the year, but the first few prescriptions were a financial pain.
Ahead of next month’s cap, DiVito said she feels much less stressed and has a little more freedom.
“I’m going to be a little more generous with my grandchildren this Christmas,” she said.
Millions of people are expected to benefit
The Inflation Control Act’s price cap of $2,000 was enacted in response to years of public outcry over the soaring prices of prescription drugs, including anti-cancer drugs, in the United States.
The law would phase in the caps, starting with a $3,250 cap on out-of-pocket costs for prescription drugs in 2024.
More than 65 million people, mainly elderly people, are enrolled in Medicare. The average annual out-of-pocket cost for cancer drugs for Medicare Part D beneficiaries in 2023 was $11,284, according to a study published in September in JAMA Network Open. (Part D refers to prescription drug coverage).
In 2025, 3.2 million Medicare beneficiaries are expected to see savings from out-of-pocket maximums, and by 2029, that number will rise to 4.1 million, according to another report from the nonprofit AARP. is expected to increase. The report does not provide a breakdown of savings for people with specific illnesses, such as cancer. However, research shows that approximately 60% of cancer cases occur in adults over 65 years of age.
The Biden administration announced Thursday that it will reduce the prices of 10 popular and expensive drugs for Medicare Part D enrollees starting in January 2026.
According to the AARP report, the 1.4 million enrollees who reach their out-of-pocket limits from 2025 to 2029 will save an average of more than $1,000 a year, and just over 420,000 will save more than $3,000. It is said to be expected.
Mary and Jim Scott of Oregon are among Medicare enrollees looking to save money next year.
In 2023, the couple’s out-of-pocket costs for prescription drugs jumped to $8,000 a year, up from an average of $240 a year previously. Jim, 83, has had a difficult year, facing multiple serious health issues including congestive heart failure, acute kidney injury and bladder cancer.
The new cap does not apply to drugs administered in a medical setting (these are covered by Medicare Part B). That means the gym will continue to cover the cost of chemotherapy not covered by insurance.
Still, Mary, 73, said the change brought a sense of relief after more than a year of struggling with rising cancer treatment costs, allowing the couple to make ends meet and focus on what matters most: Jim’s health and grandchildren. He said it makes it easier to concentrate. , their dog, and their garden.
“We are not planning a great trip. We still need to live a modest life,” Mary said. “But by the end of the summer, you might be able to put new siding on your house and do some things you’ve been putting off.”
live on a fixed income
Juliet Cubansky, associate director of the Medicare Policy Program at KFF, a nonprofit organization that researches health policy issues, said that for about 20 years, since Medicare Part D was introduced, there has been no annual cap on out-of-pocket costs. He said he had never been exposed. .
She co-authored an analysis showing that about 1.5 million Medicare enrollees had prescription drug out-of-pocket costs of more than $2,000 in 2021 and would have benefited from the cap. Of the 1.5 million people, about 200,000 Medicare enrollees spent more than $5,000 on prescriptions that year.
“So for people who need very expensive medications or who take so many medications that their monthly costs increase, they may have had to pay thousands of dollars out of pocket each year.” she says.
Because many Medicare enrollees are retired and living on fixed incomes, Cubanski said, they often end up with large amounts of debt or bankruptcy.
That’s especially true for cancer patients, said Arthur Caplan, director of medical ethics at New York University Langone Medical Center in New York City. A survey by the American Cancer Society’s Cancer Action Network released in May found that nearly half of cancer patients have medical debt, even though most have insurance.
“There are many new treatments for cancer,” Caplan said. “They are very expensive.”
Cubansky said the cap is still important even for people who don’t spend more than $2,000 a year.
“The unfortunate truth is that all of us need one scary diagnosis to require expensive medication,” she says.
Is $2,000 a year still too expensive?
George Valentine, 73, of Philadelphia, said he was having his annual physical in 2002 when his doctor noticed an abnormality in his test results. Further tests revealed that he had chronic lymphocytic leukemia.
George Valentine was diagnosed with chronic lymphocytic leukemia in 2002. (George Valentine)
The drugs he needed were expensive, costing him about $14,000 a month. While he worked in the IT industry, this wasn’t a big problem because his job-based health insurance included out-of-pocket limits, which he reached every year.
But when Valentine retired in 2019, he noticed a huge gap in Medicare coverage. Unlike his previous insurance, Medicare had no out-of-pocket limits, so he would pay 5% of his drug costs after reaching the catastrophic coverage stage.
“Five percent of $14,000 is a lot of money,” he says. “By February of any given year, we were devastated, and we were owed $700 or so a month for the rest of the year, and it never ended.”
Valentine, who is now an advocate for the PAN Foundation, a patient financial assistance organization for people with life-threatening chronic illnesses, said he would like to see the out-of-pocket cap in the new year be “zero.”
Still, with the $2,000 cap, he added, he can at least sleep at night now.
“The important thing is, once you hit $2,000, you’re done,” he said.
This article first appeared on NBCNews.com. More from NBC News:
