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This AARP Public Policy Institute Spotlight report finds that list prices for 25 top Medicare Part D drugs have increased by an average of 226 percent—or more than tripled—since they first entered the market, greatly exceeding the corresponding rate of general inflation.

Further, the analysis of these 25 individual products finds that lifetime list price changes increase dramatically the longer a product has been on the market and that, on average, nearly 60 percent of the current list price is due to price increases after the product entered the market. 

This pricing behavior can be particularly challenging for Medicare Part D enrollees, who take an average of four or five prescription drugs every month and often face cost sharing that is directly affected by drug price increases. One in five older adults report engaging in cost-coping strategies such as not filling a prescription or skipping doses to save money on their prescription medications.

These findings highlight the importance of the Inflation Reduction Act and its inflation-based rebates that will require drug companies to pay Medicare when they increase their prices faster than inflation. The Congressional Budget Office has estimated that these inflation-based rebates will reduce enrollee and Medicare Part D program spending by billions of dollars, and lead to lower drug prices in the commercial insurance market.