Medicare Part D in 2025: Preferred Pharmacy Networks Fade in a Collapsing PDP Market

Uh oh. As I predicted, the stand-alone Medicare Part D prescription drug plans (PDP) market is vanishing.

For 2025, DCI’s exclusive analysis of Center for Medicare & Medicaid Services’ (CMS) data reveals that the number of PDPs will drop to a historic low. What’s more, the share of plans with a preferred cost sharing pharmacy network will fall to its lowest rate in more than 10 years. Check out the distressing charts below and our review of the remaining national players (Aetna, Cigna, Humana, UnitedHealthcare, and WellCare).

The destruction of the Part D market marks yet another unintended consequence of the Inflation Reduction Act of 2022 (IRA). The IRA makes PDPs less economically viable and will drive even more seniors into Medicare Advantage Prescription Drug (MA-PD) plans—despite the challenges facing those plans. The 2025 decline will occur even after CMS gifted $7 billion to PDPs to prevent a complete collapse of the 2025 market. 

Legislate in haste. Repent in leisure.

What else should you expect for 2025? Find out during my 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. As always, we are offering special discounts if you want to bring your whole team.

D IS FOR DATA

A preferred network gives consumers a choice of pharmacy while providing financial incentives to use the pharmacies that offer the payer lower costs or greater control. A consumer with a preferred network benefit design retains the option of using any pharmacy in the network. However, the consumer’s out-of-pocket expenses will be higher at a non-preferred pharmacy.

Preferred network models have grown rapidly within the Medicare Part D program, where CMS calls them preferred cost sharing networks. CMS calls the pharmacies in such networks preferred cost sharing pharmacies.

According to federal regulations, preferred pharmacies in Part D must offer “covered Part D drugs at negotiated prices to Part D enrollees at lower levels of cost sharing than apply at a non-preferred pharmacy under its pharmacy network contract.” (source) Beneficiaries who qualify for the Low-Income Subsidy (LIS) face low out-of-pocket drug costs regardless of a pharmacy’s preferred status.

To identify the 2025 Part D preferred cost sharing pharmacy networks, we used the Beneficiary Cost file from Monthly Prescription Drug Plan Formulary and Pharmacy Network Information (October 10, 2024) and the 2025 Landscape files (October 2024) for PDPs and MA plans.

Our analysis of stand-alone PDPs eliminated the following plans from the sample:

• Employer-sponsored plans
• Plans from U.S. territories and possessions (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, Virgin Islands)
• Employer/union-only group plans (contracts with "800 series" plan IDs)

Our analysis of Medicare Advantage (MA) plans included only those plans that offered basic or enhanced drug coverage, and excluded plans from Puerto Rico. We identified unique plans based on the combination of Contract/Plan/Segment ID.

D-CONSTRUCTING THE DATA

Our final PDP sample included 42 PDPs, which will operate 464 regional PDPs:

• Twelve plans are being offered in all 34 regions, for a total of 408 PDPs (=12*34).

• The remaining 30 plans are operating in eight or fewer regions and account for 56 PDPs. Many of these plans are state-level Blue Cross Blue Shield plans.

Note that KFF and Avalere both reported 524 PDPs for 2025. As we explain below, this was due to the inadvertent inclusion of plans from Clear Spring Health.

Here are the total number of MA-PD plans, by type

• Health maintenance organizations (HMOs): 2,079 local plans
• Preferred provider organizations (PPOs): 1,522 local plans and 25 regional plans
• Private fee-for-service (PFFS) plans: 15 plans

Click here to review our 2024 analysis.

PART D-CLINE

The chart below shows the growth of preferred networks in stand-alone prescription drug plans. In 2011, only 7% of total regional PDPs had a preferred network. For 2024, 94% of Medicare Part D regional PDPs had a preferred network. 

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For 2025, however, the share of plans with a preferred network will drop to 84%—the lowest share since 2014. What's more, the total number of PDPs in 2025 will be the lowest since the program began in 2006. Over the past two years, the number of stand-alone PDPs has dropped by −42%, from 804 in 2023 to 464 plans in 2025.

MA-PDs are much less likely to offer plans with preferred pharmacy networks. Overall, about half of these plans will have preferred networks, which is comparable to the previous year’s share. The prevalence of preferred pharmacy networks will vary by plan type:

[Click to Enlarge]

Part D enrollment in MA-PD plans has increased over time, while enrollment in stand-alone PDPs has decreased in recent years. (source) I suspect more open pharmacy networks are contributing to this trend.

DEPARTING PART D

Here are the 2025 network highlights from the five major companies with national stand-alone PDPs. These companies account for 408 (88%) of the total 464 PDPs. Two of the 12 companies’ plans will have an open retail network. The other 10 plans will have preferred cost sharing networks.

• Aetna Medicare will offer only the legacy CVS Health SilverScript Choice plan. It has terminated the SilverScript Plus and SilverScript SmartSaver plans. For 2025, SilverScript Choice will switch from a preferred retail network to an open network.

• Cigna is offering three plans: Extra, Saver, and Assurance. Cigna introduced the Saver plan for 2023, and it includes low premiums, low copays, and an emphasis on generic drug savings. The Assurance plan will replace the current Secure Rx plan. Note that Express Scripts does not offer its own plans separately from Cigna.

• Humana is offering two of the plans—Humana Basic Rx and Humana Premier Rx Plan—that it has offered since 2020. 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. The Humana Basic Rx plan switched from an open network to a preferred retail network for 2021, but switched back to an open network for 2024 and 2025.

• UnitedHealthcare (UHC) is offering only two AARP-branded plans. Both plans—AARP Medicare Rx Preferred and AARP Medicare Rx Saver—were offered for 2024. For 2025, UHC will no longer offer the co-branded AARP MedicareRx Walgreens plan or its Rx Basic plan.

• WellCare, which is now part of Centene, is offering three plans in 2025: Wellcare Classic; Wellcare Value Script; and Wellcare Medicare Rx Value Plus. All three plans have been available since 2020.

There are two notable market exits for 2025:

• Mutual of Omaha, which had launched its plans in 2019, will not offer any Part D plans for 2025. For 2024, it had offered three plans: Rx Essential, Rx Plus, and Rx Premier.

• Clear Spring Health will not offer any plans for 2025. For 2024, Clear Spring offered only one plan. However, CMS terminated the company’s Medicare Part D contract, effective December 31, 2024. CMS’s September landscape file inadvertently listed Clear Spring Health’s plans, which explains the discrepancy between our PDP count and the other sources noted above.

Ponder just how badly the Congressional Budget Office (CBO) misprojected the IRA's impact on Part D. So far, CBO has admitted that it underestimated true costs of IRA by $10 to $20 billion. What's more, CMS's Part D "demonstration" handout to plans will cost $5 billion (plus another $2 billion in interest over the next 10 years). Yet the PDP market still tanked.

For more on the economics and strategies of narrow networks, see Chapter 7 of DCI’s 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. And stay tuned for our look at the pharmacy industry’s winners and losers in the 2025 networks.