The Part D Math Has Changed Medicare Part D is giving beneficiaries more protection—but that protection changed who pays the drug bill. Since 2025, the IRA has capped beneficiaries’ annual out-of-pocket drug spending and eliminated beneficiary cost-sharing in the catastrophic phase. At the same time, Part D plans now typically pay 60% of catastrophic drug costs, compared with only 15% before the redesign. What Happened to Pharma? Drug manufacturers actually did pay more in one part of the old system: they provided a 70% discount on brand drugs in the old “donut hole.” The IRA eliminated that coverage gap. Manufacturers now generally contribute 10% during initial coverage and 20% in catastrophic coverage for applicable drugs. So pharma’s responsibility changed rather than simply disappearing. Why Are PDP Choices Shrinking? That leaves insurance companies carrying much more risk for expensive prescriptions. This helps explain why standalone PDP choices have fallen—from about 30 plans for the average beneficiary in 2021 to 11 in 2026—and why carriers are watching premiums, deductibles and benefits more closely. Medicare drug negotiation helps by lowering prices on selected high-cost drugs, including 15 additional drugs in 2027, but it does not remove all of these cost pressures. What Should You Do? Use a Broker who will Review your Part D plan every year—compare your medications, pharmacy, premium and total yearly cost, not just the monthly premium. Sources: CMS Part D Redesign | KFF Inflation Reduction Act Analysis | KFF Stand-Alone Part D Market Analysis
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