A New Era for State Pharmaceutical Assistance Programs That Serve Older Adults

James McSpadden, AARP Public Policy Institute

Published January 25, 2024

Senior woman paying for medicines at pharmacy checkout

Prescription drug reforms enacted as part of the Inflation Reduction Act of 2022 (IRA) will dramatically alter the prescription drug landscape, reduce the prices of certain prescription drugs, and limit the prescription drug costs of millions of older adults. Less discussed is the impact that these provisions may have on state pharmaceutical assistance programs (SPAPs) and the opportunity they create for SPAPs to evolve for a new era.

This report examines the existing SPAPs and their characteristics and highlights how specific federal prescription drug reforms could generate savings for SPAPs.

SPAPs are state-run programs that help pay prescription drug-related costs for certain populations with limited financial resources, including older adults. Today, 13 states operate a SPAP to help older adults afford their prescription drugs; this figure is down significantly from 23 SPAPs in 2004. These SPAPs that currently serve older adults are diverse in design and size. Some programs enroll more than 100,000 older adults and provide comprehensive benefits; others provide a limited benefit to a small number of older adults.

Although enrollment data are unavailable for all SPAPs, recent data from certain programs show that enrolment is declining. These declines appear to be widening a gap between the number of older adults enrolled in SPAPs and the number of older adults eligible to enroll in SPAPs. Nearly 5 million older adults with Medicare may be eligible for an existing SPAP, according to an analysis from the independent research organization, NORC, at the University of Chicago.

Prescription drug reforms enacted as part of the IRA, and implemented over the next several years, affect SPAPs and could lead to savings for the programs. While none of the law’s provisions directly address SPAPs, at least three reforms are likely to generate indirect savings for the programs: expanded low-income subsidy eligibility; Medicare price negotiation; Medicare Part D premium cap. With IRA-generated savings in hand, states—both the 13 states with existing programs and those states without a current SPAP—have an opportunity to reinvest these state dollars into SPAPs and invest in the health of older residents to help ensure they can afford the prescription drugs they need.

Suggested citation:
McSpadden, James. A New Era for State Pharmaceutical Assistance Programs That Serve Older Adults. Washington, DC: AARP Public Policy Institute, January 25, 2024. https://doi.org/10.26419/ppi.00214.001

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