Large Chains’ Position in 2025’s Part D Pharmacy Networks: Supermarkets Take the Lead in a Shrinking PDP Market

In Medicare Part D in 2025: Preferred Pharmacy Networks Fade in a Collapsing PDP Market, I documented the Inflation Reduction Act’s (IRA) disruption to Medicare Part D prescription drug plans (PDPs).

Today, we examine the seven largest retail chains’ participation in the 12 major 2025 Part D networks that the five largest plan sponsors will offer. As always, we provide you with a handy table for tallying each chain’s participation and changes from 2024 to 2025.

As you’ll see, Albertsons and Publix are the only major retail chains that will be participating in all of the major PDP’s preferred and open pharmacy networks. Walmart and Walgreens will maintain strong participation, while CVS will pull back. Low-income subsidy (LIS) beneficiaries, whose ranks expanded due to the IRA, will continue to have no financial advantage for using a preferred pharmacy.

In a future post, we’ll delve into how smaller pharmacies will participate in the 2025 Part D plans, by examining the pharmacy services administrative organizations (PSAOs).

Speaking of 2025, please join Adam J. Fein, Ph.D., for his upcoming live video webinar, Drug Channels Outlook 2025, on December 13, 2024, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

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For years, preferred network models have grown rapidly within the Medicare Part D program. The Centers for Medicare & Medicaid Services (CMS) calls them preferred cost sharing networks. CMS calls the pharmacies in such networks preferred cost sharing pharmacies.

For 2025, however, the number of PDPs will drop to a historic low, while the share of plans with a preferred cost sharing pharmacy network will fall to its lowest rate in more than 10 years. See Medicare Part D in 2025: Preferred Pharmacy Networks Fade in a Collapsing PDP Market for details on next year’s market.

We examined the Part D plans offered by the five remaining major companies. There will be 10 major, multi-regional Part D plans with preferred cost sharing pharmacy networks and two plans with open networks. These companies will operate 408 regional PDPs, which equates to 88% of total regional PDPs. For each plan, we have identified the network status of seven large retail chains.

You can find our analysis of retail chain participation in 2024 plans here: Medicare Part D in 2024: Mapping Large Chains' Position in 2024’s Preferred Pharmacy Networks. For more on the economics and strategies of narrow networks, see Chapter 7 of DCI’s Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

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Due to the collapsing Part D market, all of the chains will be in fewer total available networks in 2025 compared with 2024.

The table below summarizes retail chain participation as preferred pharmacies. The green shaded boxes indicate a chain’s addition as a preferred pharmacy to a 2025 network (vs. 2024). No chains were removed as a preferred pharmacy from a 2025 network (vs. 2024). "n/a" indicates that the chain is out-of-network for 2025. 

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Here are the highlights of pharmacy participation in 2025 Part D preferred networks:

• CVS Health. Starting with the 2018 plan year, CVS Health’s retail pharmacies had begun pursuing preferred status in Part D plans. But for 2024, CVS pharmacies will be preferred in only three of the 10 plans with a preferred network tracked in the table above. It will also be in-network with the two open networks.
  
  CVS had participated in six 2024 plans with preferred networks that will not be offered in 2025: three plans from Mutual of Omaha, one plan from Clear Spring Health, and two SilverScript plans. What’s more, Aetna’s SilverScript Choice plan switched to an open network for 2025.

• Walgreens Boots Alliance. Since 2021, Walgreens has focused on participation in preferred networks. For 2025, it will be preferred in eight of the ten plans with preferred networks, and will be in-network with the two open networks.

• Walmart. Beginning in 2020, Walmart reengaged with preferred cost sharing networks. For 2025, it will again have a strong position as a preferred pharmacy in nine of the 12 major plans (including the two open networks).
  
  Medicare history buffs should note that Walmart and Humana launched the first Part D preferred network plan in 2010. For the first time since 2011, however, Humana will not offer a co-branded plan with Walmart. Instead, the Humana Walmart Value Rx Plan has been renamed as the Humana Value Rx Plan.

• Rite Aid. The industry’s recently un-bankrupted chain retained its participation in the major networks, despite its highly limited geographic scope and smaller retail footprint. For 2025, Rite Aid will participate as a preferred pharmacy in Cigna’s three plans and will be in-network for the two open network plans.
  

• Kroger. For 2025, Kroger will be preferred in seven of the 12 major plans (including the two open networks). Kroger will again be out-of-network for the Cigna plans, because it had terminated its pharmacy provider agreement with Express Scripts. Kroger’s still-pending merger with Albertsons will give it much more leverage in PBM negotiations, so this situation could change.

• Other supermarket chains. Albertsons and Publix will both participate in all 12 of the major 2025 pharmacy networks, making them the most active retail pharmacy participants.

Note that pharmacies that don't participate as preferred pharmacies can still access a substantial portion of the Part D market. That's because beneficiaries who qualify for the Low-Income Subsidy (LIS) face low out-of-pocket drug costs regardless of a pharmacy’s preferred status.

The Inflation Reduction Act expanded eligibility to beneficiaries with incomes up to 150% of the federal poverty limit (FPL). Pre-IRA, beneficiaries qualified for full Part D LIS benefits if they had incomes up to 135% of the FPL, and for partial LIS benefits if they had incomes of 135% to 150% of the FPL.

Tune in to DCI's Drug Channels Outlook 2025 live video webinar for Adam's predictions for the retail pharmacy market in the year ahead.