New Executive Order Could Bring Significant Change To Medicare Drug Plans
If you’re on Medicare and worried about rising prescription costs, you’re not alone. The good news? Major changes are coming—and they’re designed to make medication more affordable for seniors like you.
In this week’s episode, we broke down how Medicare Part D works, what’s changing in 2025, and how to make sure you’re getting the best deal on your medications. Whether you’re managing a chronic condition or just want to avoid unnecessary spending, these updates could save you thousands.
The Push for Lower Drug Prices: Most Favored Nation Pricing
Back in 2020, President Trump signed an executive order that aimed to lower U.S. drug prices by tying them to the prices paid in other developed countries—a strategy called “most favored nation pricing.”
Here’s what that could look like:
- Ozempic costs $936/month in the U.S.
- In Japan? $169
- In the UK? $93
- In Australia? $87
- In France? $83
That’s not a typo—U.S. patients are paying over 10x more for the same drug. The goal of this order was to pressure pharmaceutical companies to cut prices or face big caps on their Medicare earnings.
Understanding How Medicare Part D Works
Medicare Part D plans are split into three cost phases:
- Deductible Phase
- You pay 100% until you meet the deductible (up to $590 in 2025)
- Tier 1 & 2 drugs may be exempt
- Initial Coverage Phase
- You pay 25% of drug costs
- Your plan covers the rest—75% for generics, 65% for brands, Medicare covers 10%
- Catastrophic Phase (starting in 2025)
- Once you hit $2,000 in out-of-pocket costs, you pay $0 for the rest of the year
- The cost burden shifts: 60% insurers, 20% Medicare, 20% manufacturers
The Inflation Reduction Act: What It Means for You
The Inflation Reduction Act of 2022 is a game-changer for Medicare drug coverage:
- $2,000 out-of-pocket cap starting in 2025
- Eliminates the 5% coinsurance in catastrophic coverage
- Capped insulin at $35/month through the senior savings model
- Begins government negotiation of drug prices starting in 2026
What kind of savings are we talking about?
Drugs like Eliquis, Xarelto, Farxiga, and Enbrel are expected to drop in price by 38% to 79%.
What the Industry Thinks
Pharmaceutical companies are pushing back, claiming these reforms will hurt innovation and cut funding for research. Some experts say that while Medicare might save billions, patients may not feel the full benefit immediately.
There’s also concern that other countries may face price hikes as companies try to balance out lost revenue from the U.S. market.
Medicare Part D Premiums: What’s the Trend?
Despite inflation, premiums for Medicare Part D have stayed relatively steady:
- 2006 average: $26
- 2025 average: $45
But premiums vary widely. Some plans are as low as $0/month, while others go up to $133/month depending on the drugs you take.
5 Cost-Saving Tips for Medicare Beneficiaries
If you’re on Medicare, here’s what you can do to save on prescriptions right now:
- Review Your Plan Every Year
Use the Annual Enrollment Period (Oct 15–Dec 7) to switch plans if needed. Your current plan might not be your best option in 2025. - Bring Your Formulary List to Doctor Visits
Ask if there’s a covered alternative that works just as well. - Check for Extra Help
If you’re still struggling after hitting the $2,000 cap, apply for Extra Help at ssa.gov. It can dramatically reduce premiums and co-pays. - Shop Smart During the Deductible Phase
Ask your doctor about generics or Tier 1/Tier 2 drugs that are often exempt from deductibles. - Prepare for 2026 Drug Price Negotiations
Keep an eye on high-cost prescriptions. If you’re taking one of the targeted drugs, price relief could be coming soon.
The Future of Drug Pricing and Medicare
We’re heading into a period of major change. The goal is to reduce costs for patients and the government, but some of the biggest savings may take time to reach your pharmacy counter.
In the short term, seniors who take expensive medications for chronic conditions will see the most relief. Over time, as government negotiations kick in, broader savings should start to show.
Final Thoughts
Prescription costs are one of the biggest stressors for retirees—but they don’t have to be. With Medicare Part D reforms, the Inflation Reduction Act, and some smart planning, you can take back control.
The $2,000 cap is just the beginning. Stay informed. Review your plan. And don’t miss open enrollment.
