Drug Prices
Kevin Willmann
An AARP Public Policy Institute Spotlight report from early 2025 found that prices for the top 25 Medicare Part D drugs not yet scheduled for Medicare price negotiation have nearly doubled since entering the market, increasing by an average of 98%.
According to the study, these price increases often exceeded the inflation rate. Additionally, the top 25 drugs made up $50 billion in 2022 Part D spending and were used by more than 7 million enrollees in the drug program.
Higher drug prices on Part D enrollees
“Medicare beneficiaries have been affected by rising drug costs, as have many other people who rely on medications to manage their health conditions,” said Juliette Cubanski, deputy director for the program on Medicare policy for Kaiser Family Foundation. “This can be especially hard for older adults, though, since many use multiple drugs and also have lower incomes to draw from to pay for rising out-of-pocket costs.”
For older adults on Medicare Part D, who take an average of four to five prescription drugs per month, concerns over high drug prices have led to measures like medication nonadherence. Research has shown that medication nonadherence contributed to hospital admissions in up to one-third of patients. This is something that Michael Schweitzer, RPh, BS, owner of Bedford Drug in Bedford, IA, has seen in his practice.
“We have had seniors not fill their prescriptions for medications with high out-of-pocket costs,” Schweitzer said. “Meds for diabetes, COPD, asthma, [and] atrial fibrillation are some of the most common meds where we see this happen. As a result of this, the patient may have to use a cheaper medication that does not provide the same level of relief for the condition being treated or just decide not to treat the condition at all.”
AARP sees provisions in the 2022 Inflation Reduction Act (IRA) as important steps in lowering drug costs. Provisions in the law would cap drug costs, allow Medicare to negotiate drug prices, and penalize drug companies for increasing rates faster than inflation. However, those regulations listed in the IRA also have their critics in the pharmaceutical industry. While the legislation could bring drug prices down, a 2023 analysis from Kaiser Family Foundation found that Part D premiums would rise.
Cubanski noted that the IRA changes do provide some good news for individuals with Medicare, including out-of-pocket spending capped at $2,000 and another program that allows Medicare enrollees to spread out-of-pocket costs over time rather than face costs all at once.
“Even as drug costs rise, what Medicare patients pay out-of-pocket each year will be limited,” Cubanski said. “Both of these new measures should help to improve medication affordability and, as a result, make it easier for people with Medicare to access the drugs they need.”
While concerns over higher Medicare Part D prescription drug prices impact older adults taking prescription medications, pharmacists are affected not only by these higher prices, but also by reimbursement rates.
Low reimbursement rates for pharmacy
Just as low reimbursement rates concern physicians, the same is true for pharmacists.
While PBMs might negotiate lower prices for patients, that does not necessarily get passed down to pharmacies, as they receive less reimbursement for drugs prescribed. The combination of high drug prices and low reimbursement can be a one-two punch affecting many pharmacists, said Schweitzer.
“The combination of high drug prices and low Medicare reimbursement rates has affected our inventory levels,” he said. “We do not carry as many medications, and [for] the ones we do carry, we carry a smaller inventory.”
While low reimbursement affects all pharmacies, small, independent ones seem to be hit the hardest. Unlike larger chain stores, independents are already operating on thin profit margins. Low reimbursements threaten their ability to cover the costs of providing medication and put more of a strain on them to keep their doors open.
“We have declined to participate in many of the drug plans since reimbursements would be below our cost to acquire the medications, and the dispensing fee does not cover the cost for our staff to prepare and dispense the medications,” Schweitzer said, adding this might be the last year his pharmacy participates in Medicare Part D due to the low reimbursements.
“There is no sense in participating in the program if we continue to lose money providing services to these patients,” he said. “It is not what we want to do, but every year, the reimbursements get lower, and the losses get bigger.”
Schweitzer said this has resulted in patients having less access to pharmacies and pharmacy services due to fewer “in-network” or preferred pharmacies. In some cases, patients make a 40-mile minimum round trip to use such pharmacies. Or they use mail-order pharmacies without access to a health care provider to assist them with their medication issues.
How can pharmacists help Part D enrollees?
While any future effects of legislation to lower Medicare Part D drug prices remain to be seen, pharmacists have a unique role in helping Part D enrollees navigate drug costs.
Pharmacists are key health care advocates for Medicare patients due to their broad knowledge of drug classes and complexities in dealing with insurance companies.
As such, pharmacists can help patients find other assistance programs, such as a state pharmacy assistance program, which may be available to improve access and reduce costs for medications.
Pharmacists can also remind patients to review their plans annually to make sure their medications are covered, as well as assist them with any coverage restrictions. Other suggestions include recommending generic drugs that may be in a lower-cost tier. MTM, or comprehensive medication review, is a Medicare Part D component that pharmacists can administer to their patients.
By acting as advocates for Part D enrollees, pharmacists could gain the trust of Medicare patients. This would benefit their pharmacy with return visits from patients and help them adhere to prescribed drug routines.
“Pharmacists can help their patients navigate their insurance coverage requirements and possibly steer people to lower-cost alternatives if they are faced with unaffordable drug costs,” Cubanski said. “But ultimately, doctors should also be involved in decisions about switching prescriptions and prescribing alternatives.”
Schweitzer similarly noted, “I would advise seniors to work with their pharmacist and medical providers to make sure that they are taking the most cost-effective medications without compromising the patient’s health.”
At the same time, Schweitzer urged older adults to “be active with their elected officials and explain how the loss of access to medications and pharmacy services will hurt their overall health,” he said.
“They should also make these officials aware of the added burden of travel when the patient does not have a local pharmacy available as well as the impact of losing a pharmacist who has a personal relationship with the patient.” ■