AARP warns of 24% Medicare Part D premium surge as drug subsidies expire
Seniors face steeper costs for standalone plans while advocates push for expanded price negotiations to curb spending on top-selling brand-name medications.
AARP has released a report detailing how American seniors pay significantly more for brand-name prescription drugs than patients in 19 comparable countries, a gap that continues to widen annually. The organisation is calling for expanded drug price negotiations and policies requiring manufacturers to match their lowest international prices to save billions. This advocacy coincides with the end of a federal subsidy program for Medicare Part D standalone plans after 2026, which is projected to lead to premium increases of up to 24% for enrollees.
The report examined 25 top-selling brand-name drugs that account for more than $100 billion in annual Medicare spending. U.S. prices for these medications climbed 81% on average after their initial market launch, whereas prices for the same drugs fell 13% on average across the 19 comparable countries. Specific examples include Enbrel, where the U.S. price increased 873% after launch while falling 27% internationally, and Januvia, which rose 126% domestically while declining 40% in comparison markets.
The financial pressure on enrollees intensifies as the Centers for Medicare and Medicaid Services ends the Part D Premium Stabilization Demonstration after 2026. This $9.8 billion support program had subsidised standalone prescription drug plans to keep monthly premiums lower than market rates. The 2027 national average monthly bid amount is projected to rise to $296.05, a 24% increase that reflects both drug cost growth and the removal of the subsidy.
Current standalone drug plan enrollees pay about $36 per month on average and could lose roughly $16 in monthly subsidies, according to a KFF analysis. Juliette Cubanski of the Program on Medicare Policy at KFF noted that losing $16 on a $36 premium represents a large proportional change for affected beneficiaries. In contrast, Medicare Advantage plans with built-in drug coverage charge roughly $8 per month on average, highlighting a growing disparity between plan types.
CMS administrator Mehmet Oz stated that premiums will go up by less than $10 for most Medicare recipients, framing the increase as manageable. However, AARP urges seniors to use the October 15 through December 7 open enrollment period to weigh existing coverage against Medicare Advantage options. The organisation notes that while Medicare began paying negotiated prices on ten high-cost drugs in January 2026, and another 15 are set for 2027, the extent to which these savings offset premium hikes remains to be seen.
