Key takeaways:
Medicare has more than 55 million people enrolled in Part D prescription coverage — whether in standalone plans or rolled into Medicare Advantage plans.
The addition of high-cost specialty drugs to treat common conditions, as well as hefty price tags for weight-loss medication approved to treat other conditions such as stroke prevention, has increased the overall cost of Part D plans, including premiums.
Prescription prices in the U.S. across all medications (brand-name and generic) are nearly three times higher than the average prices in other high-income countries.
Pharmaceutical companies set medication prices in the U.S. with little to no government regulation.
Overview of Medicare prescription drug costs
Medicare prescription drug coverage comes from Part D plans. More than 55 million people were enrolled in Part D coverage as of May 2025. Part D can be a standalone plan that pairs with original Medicare (Part A hospital insurance and/or Part B medical insurance) or a Medicare Advantage plan that doesn’t include prescription coverage. But most Medicare Advantage plans include Part D benefits.
You costs for Part D coverage are:
Premiums, billed separately if you have a standalone plan
Deductible, which can’t exceed $590 in 2025 and $615 in 2026
Copayments and coinsurance, which vary by plan
Out-of-pocket limit, which is $2,000 in 2025 and $2,100 in 2026
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Coverage phases
The Part D plan design has three phases:
Deductible phase: Health plans reset on January 1 and return enrollees to this phase, where they pay all prescription medication costs until they meet the Part D standard deductible, which is $590 in 2025 and $615 in 2026. (Some plans have a lower deductible or no deductible.) You can spread your out-of-pocket costs across the year if you enroll in the Medicare Prescription Payment Plan.
Initial coverage phase: Enrollees pay copays and coinsurance for all covered prescription medication costs until reaching the out-of-pocket maximum, which is $2,000 in 2025 and $2,100 in 2026. Payments that you make throughout the year for your covered medications are the only ones that count toward your out-of-pocket limit. Manufacturer discounts on covered medications will not be calculated into your out-of-pocket spending.
Catastrophic coverage phase: Your plan pays 100% of the cost for covered medications for the rest of the year.
It’s important to note that some prescription medications are covered under Part B if they must be administered in a healthcare setting — and are subject to 20% coinsurance.
Factors that make drugs expensive with Medicare
Older, sicker population
Medication costs are higher for Medicare because of its population. Enrollees are people ages 65 and older, along with younger people who qualify for Medicare because of chronic, high-cost conditions such as end-stage renal disease and amyotrophic lateral sclerosis (ALS), known as Lou Gehrig’s disease.
Brand-name vs. generic drugs
Brand-name medication costs more than generic options, and many medications have lengthy patent protection and no generic available.
Part B coverage
Some prescription medications — such as Keytruda and Opdivo, both cancer immunotherapy infusions — are received in a medical setting and billed under Part B. That means you are responsible for 20% coinsurance. In 2023, the combined annual spending by Medicare and enrollees was $69,800 per user for Opdivo and $76,100 per user for Keytruda — amounting to more than $10,000 per claim. Certain Medigap supplement plans can cover Part B coinsurance.
How much does Medicare cost? In addition to the Part B monthly premium — which you must pay with original Medicare and Medicare Advantage plans — most enrollees have cost sharing when they receive care.
Can’t afford your prescriptions? If you qualify, you can get help paying for medications from patient assistance programs, state pharmaceutical assistance programs, and Medicare’s Extra Help program.
Why do drugs get dropped from formularies? When a less-costly generic or new treatment becomes available or a safety concern arises, a medication can be removed from coverage.
Lack of price negotiation
The first 10 medications for Medicare Drug Price Negotiation were selected in 2023, but lower prices won’t be effective until at least 2026 because drugmakers have sued and the lawsuits remain unresolved. These first 10 Part B drugs won’t see their prices drop because of Medicare price negotiation until 2028.
Limited price regulation and competition
Pharmaceutical companies invest large amounts of money into research and development. Prescription medications are also more costly in the U.S. because drugmakers set the prices with little regulation and the patent system limits competition.
Tips to lower prescription drug costs with Medicare
You can reduce your Part D costs by using these savings strategies:
Talk to your prescriber about other treatment options: Ask your prescriber about generics and alternative medications, such as biosimilars for biologics. These may be more affordable. Lower-cost options may include filling a 90-day supply instead of a 30-day supply or getting a higher-dose pill that you can cut in half, if appropriate.
Ask for an exception from your prescription plan: There are two kinds of Part D exceptions that can be requested by the plan enrollee, their prescriber, or a representative: A formulary exception should be requested for medication not on the plan’s formulary (list of covered medications). You can also ask to have a requirement or restriction — such as step therapy, prior authorization, or quantity limits — for a formulary medication waived. A tiering exception should be requested if you need a medication from a more costly tier on lower cost-sharing terms. An example would be getting a high-cost specialty medication at a more affordable copay or coinsurance.
Explore cost-saving programs: Patient assistance programs and state pharmaceutical assistance programs can help you afford specific medications or treatment for specific conditions if you have Part D coverage. If you have limited income and resources, you may qualify for Medicare’s Extra Help program, which can greatly reduce your out-of-pocket costs.
Reconsider your Part D plan during open enrollment: If your plan doesn’t cover your prescription, find a plan that has the medication on its formulary. If your prescription coverage is included in a Medicare Advantage plan, you may need to switch your health plan. The Medicare Plan Finder tool can help you find a Medicare Part D plan that covers the medications you need.
Use GoodRx: You can search GoodRx to compare prices for your prescription at pharmacies near you.
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Frequently asked questions
Actually, Medicare drug price negotiation is underway, but progress has stalled because of lawsuits filed by pharmaceutical companies.
In 2021, Medicare spent $12.6 billion covering Eliquis, a blood thinner that treats blood clots. This medication is in the first group of drugs selected for the Medicare Drug Price Negotiation program.
Yes, you can use GoodRx to save on medications, but what you spend when using GoodRx doesn’t count toward your Part D deductible or out-of-pocket maximum.
Actually, Medicare drug price negotiation is underway, but progress has stalled because of lawsuits filed by pharmaceutical companies.
Part D doesn’t cover certain medications, including treatments for:
In 2021, Medicare spent $12.6 billion covering Eliquis, a blood thinner that treats blood clots. This medication is in the first group of drugs selected for the Medicare Drug Price Negotiation program.
Yes, you can use GoodRx to save on medications, but what you spend when using GoodRx doesn’t count toward your Part D deductible or out-of-pocket maximum.
The bottom line
Medications can be costly with Medicare coverage for a variety of reasons. Enrollees are older and sicker than the U.S. population at large and require more high-priced medications. Medicare Drug Price Negotiation doesn’t take effect until at least 2026, and that could be delayed by drugmaker lawsuits. The U.S. also has limited drug price regulation. Perhaps the most jarring drug costs for Medicare enrollees are medications covered under Part B, such as cancer infusions, that are administered in a healthcare setting. Those high-cost medications are billed at 20% coinsurance for people with original Medicare, which can bring sticker shock — especially to enrollees who don’t have Medigap supplement plans.
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References
Centers for Medicare & Medicaid Services. (2024). Exceptions.
Centers for Medicare & Medicaid Services. (2025). Final CY 2026 Part D redesign program instructions.
Centers for Medicare & Medicaid Services. (2025). Medicare enrollment dashboard.
Choi, J. (2025). AstraZeneca asks Supreme Court to hear lawsuit challenging Medicare drug price negotiation. The Hill.
Cubanski, J., et al. (2023). A small number of drugs account for a large share of Medicare Part D spending. KFF.
Cubanski, J., et al. (2023). Explaining the prescription drug provisions in the inflation reduction act. KFF.
Cubanski, J. (2025). FAQs about the Inflation Reduction Act’s Medicare drug price negotiation program. KFF.
Cubanski, J. (2025). People with Medicare will face higher costs for some orphan drugs due to changes in the new tax and budget law. KFF.
Medicare Interactive. (2025). Drugs excluded from Part D coverage. Medicare Rights Center.
Medicare.gov. (n.d.). Costs.
Medicare.gov. (n.d.). End-stage renal disease (ESRD).
Medicare.gov. (n.d.). How do drug plans work?
Medicare.gov. (n.d.). How much does Medicare drug coverage cost?
Medicare.gov. (n.d.). What's Medicare drug coverage (Part D)?
Phengsitthy, N. (2025). AstraZeneca seeks high court review of Medicare drug price talks. Bloomberg Law.
