Warner & Kaine Celebrate Inflation Reduction Act’s $2,000 Per Year Cap on Out-Of-Pocket Prescription Drug Costs for Americans with Medicare

WASHINGTON, D.C. –  Today, U.S. Senators Mark R. Warner and Tim Kaine (both D-VA) celebrated a provision of the Inflation Reduction Act that will go into effect on January 1, 2025 to cap out-of-pocket costs for prescription drugs at $2,000 per year for Americans with Medicare Part D. The cap will apply to individuals’ combined, total costs for covered drugs—regardless of how many medications they need. Some estimates have shown that Virginians on Medicare will save an average of $440.62 on out-of-pocket costs on prescription drugs thanks to this cap.

“The Inflation Reduction Act has already made a huge difference in the lives of Virginians. It’s capped the price of insulin at $35 per month for seniors, lowered health care and energy costs, brought millions of dollars in investment to Virginia, and created manufacturing jobs—all while lowering the deficit,” said the senators. “We’re thrilled that beginning in 2025, Americans on Medicare will have a $2,000 per year out-of-pocket cap on prescription drugs. Many seniors currently pay thousands of dollars a year for medications they need, so this provision is crucial to saving them money. We will keep working to build on this progress and ensure that Virginia harnesses all the benefits of the Inflation Reduction Act.”

In 2025, the Centers for Medicare & Medicaid Services (CMS) is also expected to announce 15 more Medicare Part D drugs for negotiation. The IRA allowed CMS to negotiate the price of prescription drugs for the first time—a move Warner and Kaine had long pushed for. This year, the Biden Administration announced negotiated prices for the first 10 drugs for patients covered by Medicare Part D. The negotiated prices for the first 10 drugs, which will go into effect in 2026, will save $1.5 billion for Americans with Medicare Part D and $6 billion in the federal budget in the first year of implementation.  

Many other provisions from the Inflation Reduction Act (IRA), which the senators voted to pass in 2022, have already gone into effect to lower health care costs and expand clean energy manufacturing in Virginia and across the country.

Health Care:

• Black lung benefits: The law permanently extended the black lung excise tax at a higher rate, providing more certainty for miners, miner retirees, and their families who rely on the fund to access benefits. In Virginia, thousands of miners and their families have received benefits through the trust fund since it was established, including approximately 2,600 Virginians in 2021. Click here to learn more about what this means for miners and miner retirees like Mr. James Gibbs, a Bristol native, the At-Large International Vice President of the United Mine Workers of America (UMWA), and Kaine's guest to the 2023 State of the Union.
• $35 cap on the cost of insulin: Out-of-pocket costs for insulin—regardless of how much a patient needs—are capped at $35 per month under Medicare. Thanks to the IRA, 36,461 Virginians on Medicare who use insulin now pay no more than $35 per month. Click here to learn how seniors like Mrs. Marguerite Bailey Young of Fredericksburg, who was Warner’s guest to the 2023 State of the Union, are benefiting from the $35 cap.
• Free vaccines for Medicare recipients: People with Medicare no longer have to pay to receive most vaccines under Medicare Part D, which includes vaccines for shingles, HPV, MMR, diphtheria, and pertussis. In 2023, over 230,000 seniors in Virginia received a recommended vaccine free of cost.
• Extension of ACA subsidies: During the pandemic, Congress enhanced subsidies under the Affordable Care Act (ACA) to help lower health care premiums for millions of Americans. The IRA extended these enhanced subsidies through 2025 to help make Virginians’ health insurance more affordable. 350,008 Virginians with ACA coverage are receiving assistance to lower the cost of their premium. In 2022, Virginians saved an average of $508 per month on their health insurance premium.
• Lower Premiums for More Than 500,000 Virginians: There are additional provisions that went into effect to limit annual premium increases for Americans, including more than 500,000 Virginians enrolled in Medicare Part D.
• Penalties on drug manufacturers that increase prices: Manufacturers are required to keep the increase in the cost of their drugs at or below inflation.

Clean Energy:

• Boosts to clean energy investments: Clean energy manufacturers can apply for expanded tax credits that incentivize investment in and production of renewable energy technologies like solar power and offshore wind. The IRA set aside $4 billion in credits for businesses that make these investments in energy communities that have seen closures of coal mines or retirements of coal-fired power plants in recent years. This means that communities in Virginia, especially Southwest Virginia, are well-positioned to benefit from many of these tax credits and funding opportunities. In 2023, Kaine hosted an event at Mountain Empire Community College in Big Stone Gap to discuss how Virginia can best harness the clean energy tax credits, economic development, and job creation opportunities created by the legislation.
• Improvements to home energy efficiency: Homeowners can receive up to 30 percent back through tax credits for making energy efficiency improvements to their home—generally up to a maximum of $1,200 per year but potentially up to $3,200 if improvements include heat pumps, heat pump water heaters, or biomass stoves.
• Simplified Electric Vehicle (EV) Tax Credits: The IRA allows qualified individuals to get a tax credit of up to $7,500 for the purchase of new EVs or a tax credit of up to $4,000 for certain used EVs and plug-in hybrids purchased through a dealership. Virginians who buy an EV from a participating dealer can now choose to receive their tax credit for that purchase at the point-of-sale instead of after filing their taxes.
• Federal funding to help low-income and disadvantaged communities more easily access solar energy: The IRA brought over $156 million in federal funding to Virginia to support solar energy development in low-income areas, which will lower energy costs for families and create good-quality jobs while tackling the effects of climate change.

The IRA has also expanded clean energy manufacturing in Virginia and brought a series of corporate investments to Virginia, including:

• A $681 million investment by LS GreenLink to build a state-of-the-art facility in Chesapeake to manufacture high-voltage subsea cables used for offshore wind farms. This will create over 330 jobs.
• An over $400 million investment by Topsoe to build a new manufacturing facility in Chesterfield County that will manufacture solid oxide electrolyzer cells (SOEC), a crucial component for producing clean hydrogen. This will create at least 150 new jobs in Virginia.
• An investment of over $208 million by Mack and Volvo Trucks and a federal grant award of over $208 million to sustain 7,900 union jobs and create 295 new jobs in Virginia, Maryland, and Pennsylvania. Volvo Trucks is the second largest employer in the New River Valley, sustaining 3,600 jobs in Dublin, including 3,200 United Automobile Workers (UAW) jobs. In September 2024, Warner and Kaine visited Volvo’s New River Valley plant to celebrate the investment.

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