Substantial variation among Medicare beneficiaries in the impact from 2025 Part D out of pocket spending caps

In 2025, Medicare Part D introduced an annual $2000 limit on beneficiary out-of-pocket (OOP) costs under the Inflation Reduction Act. The objective of this research is to analyze the variability of OOP costs for beneficiaries with high total drug spending to understand who would benefit from the OOP cap. Using Part D data from 2022, we examine OOP costs for 2 samples of beneficiaries with high total drug spending: those with annual drug spending exceeding $6560 (who would have more than $2000 in OOP under the standard-benefit) and those in the top 1% of annual drug spending. We find that 64.72% and 37.84% of beneficiaries in each respective sample did not have OOP costs that would reach the annual cap. There is large variation in OOP costs even among beneficiaries who all have very high annual total drug spending, and reductions in patient liability from third-party payors appears to be an important reason for this variation. The introduction of OOP drug spending caps will result in substantial variation in the change in OOP spending for high-spending Medicare beneficiaries.