Lawmakers promised that the Inflation Reduction Act (IRA) would make prescription drugs more affordable. But a new analysis from the USC Schaeffer Center shows that most Medicare beneficiaries could see higher out-of-pocket costs under the law.
What’s happening: Insurers and PBMs are shifting costs to patients through higher deductibles and coinsurance in response to the IRA. And while the IRA caps annual out-of-pocket costs at $2,000, most beneficiaries won’t hit that cap and may see their costs increase through higher deductibles and coinsurance.
The study: Researchers examined trends in Part D benefit design between 2020 and 2024 and compared them to changes between 2024 and 2025 to see how insurers are adjusting their policies amid increased financial responsibility under the new law.
Key findings:
- Average deductibles in Medicare Advantage drug plans jumped from $62 in 2024 to $224 in 2025.
- The share of enrollees in Medicare Advantage prescription drug plans with coinsurance for the tier typically used for preferred brand drugs rose from 0.7% in 2023 before the IRA took effect, to 27.5% in 2025 under the new rules. Similarly, the share of enrollees in standalone Part D plans with coinsurance for this tier rose from 40.7% to 84.1% over that same period.
- Plans are replacing co-pays with coinsurance, tying beneficiary costs to the undiscounted list price of the drug, rather than the price after rebates and discounts made to plans and PBMs are applied.
Why it matters: Patients are paying more given the increase in plans with coinsurance—and many will never even benefit from the IRA’s $2,000 out-of-pocket cap.
The bottom line: The IRA doesn’t guarantee savings at the pharmacy. Insurers and PBMs are finding new ways to pass costs to patients. Policymakers must hold insurers and PBMs accountable if they’re serious about lowering drug costs.
Learn more at PhRMA.org/IRA.
Elizabeth Carpenter
Elizabeth Carpenter serves as executive vice president of policy and research for the Pharmaceutical Research and Manufacturers of America (PhRMA).
Carpenter leads policy and research at PhRMA, focusing on policy analysis, original research and policy development. Previously, she spent 10 years at the health policy and business strategy firm, Avalere, most recently serving as president. Prior to joining Avalere, Carpenter was a senior advisor in the health policy practice at McKenna Long & Aldridge LLP, where she provided government affairs and public policy support to payers, providers, private exchanges, and states on a wide range of health policy and political issues.
Previously, she served as the associate policy director for the Health Policy Program at the New America Foundation where she led Congressional and media relations during the debate over the ACA and provided educational and technical support to stakeholders, members of Congress and the media. Carpenter started her career on Capitol Hill on the legislative and campaign staffs of Senator Lincoln Chafee (RI).
Elizabeth Carpenter headshot
https://www.linkedin.com/in/elizabethavalere/
Executive Vice President, Policy and Research