Health policy analysts are raising concerns regarding the rising costs of Medicare’s prescription drug program after a recent report indicated that more than one in five Medicare Part D enrollees hit the program’s $2,000 out-of-pocket drug cap in 2025.
The finding, detailed in a report by congressional Medicare advisers, highlights the financial strain on the system as the redesigned program faces difficult spending tradeoffs. The Inflation Reduction Act limits what seniors pay for outpatient prescription drugs and shifts costs beyond the cap to taxpayers, insurers, and drug manufacturers.
According to the report, 66% of total Part D drug spending occurred in the catastrophic phase in 2025. Notably, spending on GLP-1 drugs rose from $300 million in 2024 to $2 billion in 2025, while cancer and diabetes treatments posted double-digit spending growth.
Medicare’s doctors’ services, outpatient care, and prescription drug coverage are projected to account for 44% of the federal deficit over the next decade, according to the Cato Institute. The Hospital Insurance trust fund is projected to become insolvent in 2033, while Part D spending is projected to grow 9.4% annually through 2030.
Medicare trustees project Part D spending will rise to about $222 billion in 2026 from $181 billion in 2025 and reach $346 billion by 2035. Possible changes to address these costs include adding copays for certain high-cost drugs after beneficiaries reach the cap or changing how the cap is calculated.
In other news, a federal court recently rejected Merck & Co., Inc.’s challenge to the government’s drug-price negotiation program, allowing the government to continue implementing negotiated prices for selected high-cost drugs.
