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The Inflation Reduction Act of 2022 - how (and when) will it impact YOU?

By Derek Graham


Nothing happens in the political world these days without controversy. What one political party touts as success, the other political party deems a catastrophe that will result in horror for everyone involved. One example of polarizing politics is the recently enacted Inflation Reduction Act.

Regardless of whether you think this act is remarkable or ill-conceived, if you or a loved one receives Medicare, you need to understand how it will impact your prescription drug costs.

Currently, it is no secret that Americans pay two to three times what citizens of other countries pay for prescription drugs. Changes might be on the horizon, but before you get too excited, it is important to remind you that with the federal government, things rarely move quickly. The drug price changes will roll out gradually beginning in 2023 but with some of the changes not being fully implemented until as late as 2026.

The Inflation Reduction Act of 2022 will have an impact on prescription drug prices for people on Medicare in the following ways:
  • Capping Medicare Beneficiary Out-of-Pocket Costs in Part D at $2,000.00. Ask anyone on Medicare about whether the prescription drug prices are fair, and you will get an earful. For people with diabetes, cancer, asthma, and other conditions that require life-saving medications, the cost can be quickly overwhelming.

  • Allowing the Federal Government to be more aggressive in negotiating drug prices.

  • Stopping Rapid Price Increases. If drug companies raise prescription medication prices faster than inflation, they must pay Medicare a rebate. This is to incentivize drug companies from pursuing rapid price increases that out-pace inflation.

  • Capping Insulin Copays. For Medicare recipients, there is limit on monthly cost sharing for insulin products to no more than $35/month. This includes insulin covered under both Part D and Part B and there will be no deductible that applies.

  • Providing Extra Help Paying for Drugs for Medicare Beneficiaries with Low Incomes. Currently, consumers with incomes between 135% and 150% of poverty guidelines receive only partial help, meaning they still pay premiums and face more significant co-pays. This will be expanded to allow those same individuals to receive full help.


These are just a few of the changes that will be implemented over the next several years. Only time will tell which of these changes will bring about positive outcomes and make a difference in people’s lives.


Two things we know for sure are:

  1. prescription drug companies will seek out loopholes and exceptions; and

  2. drug prices have gotten completely out of hand in the United States.



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