Medicare Part D is the prescription drug portion of the new Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Part D was designed to subsidize the costs of most medications issued to US citizens, where there are some of the highest prices of prescription drugs in the world. Although the Act was brought in during 2003, Part D did not take effect until January 2006.

Eligibility for Part D is reliant upon eligibility to either Part A or B of Medicare. If a beneficiary holds a private plan such as Prescription Drug Plan or Medicare Advantage plan, they can access Part D through the private plan. Some private plans, and indeed even a portion of Part C, cover both medical services and medications. However it is important to understand that not all drugs are covered by the same level of drug plan. If a cheaper alternative is available at a lower level plan, it must be used.

The drug plan under Part D is defined by its structure, not by the needs of the beneficiary. Therefore, across the board, every beneficiary must pay $310 deductible and 25% of the drug costs up to a coverage limit of $2830. When this limit is exceeded, the beneficiary must pay 100% of drug costs up to $4550. When an individual reaches this phase they have entered the "Donut Hole", an area where there is a coverage gap between initial drug coverage and catastrophic drug coverage. Beyond the Donut Hole, the beneficiary pays 5% of the drug costs until the end of the calendar year. In January deductible is paid once again and the climb to coverage limits begins anew. In addition to the above costs, there is also a monthly premium paid to Medicare by the beneficiary. In general, the premiums are about $30 to $40. For those living well below the poverty line there are low-income subsidies. Monthly premiums may be covered, the annual deductable, even some drug payments.

In 2010 the Patient Protection and Affordable Care Act was enacted, beginning a ten year process to close the Donut Hole in Part D. Particular measures are scheduled to take place in an effort to ease the cost of drugs for beneficiaries. Such measures include discounts on brand and generic drugs, a decrease in coverage limits and a decrease in deductible. In the meantime, many beneficiaries have taken advantage of 'Medigap' plans specifically intended to fill the gap left between initial coverage and catastrophic coverage. There are constraints however, such as being disallowed to have both Medicare Advantage Plan and a Medigap Policy.

There are many drugs not covered by Plan D at all. Any substance not approved by the Food and Drug Administration is excluded, those not available for sale in the US, drugs covered under other parts of Medicare, and any prescribed for use outside of their indicated parameters. In addition, there are several categories of drugs completely excluded from Medicare. They are as follows: drugs for weight loss or gain, drugs used to treat anorexia, drugs for promoting fertility, drugs for treating erectile dysfunction, drugs used for cosmetic purposes, drugs to treat symptoms of the common cold, barbiturates, benzodiazepines, prescription vitamins.

When the Prescription Drug, Improvement, and Modernization Act was designed, it included the stipulation that the US government could not have a role in setting prices of prescription drugs. Unfortunately, that particular part of the Act meant the drug companies could set their prices unchecked. Knowing this, it makes sense the US has some of the highest prices on prescription drugs in the world. Another interesting point is the US is one of the only nations in the world to allow advertising by pharmaceutical companies directly to the consumer. Knowing just how expensive it is to fund the high quality commercials used by these companies, many people point to the commercials when discussing the high cost of prescription drugs.

When pressed, pharmaceutical companies defend their prices of prescription drugs as being caused by intense research and development. While this does seem like a reasonable claim, especially considering the relatively low cost inherent in the actual construction of the pill. On the other had, a lot of other developed countries do not seem to have the same inflated prescription drug prices.

Since prescription drug prices have entered the political arena, there has been nothing hyperbole and rhetoric spewing out of the mouths of politicians. Congress has tied their hands when it comes to Part D. A naive person might speculation that the intentions were genuine concern for the integrity of drug prices. Other, more realistic people might even think it was done as a diversionary tactic to hide the hand of the drug companies in the governmental cookie jar (for protection).