Wednesday, January 18, 2017

New 2017 Part D Enrollment Data: Walgreens and Walmart Trounce CVS in Preferred Networks

Just-released data from the Centers for Medicare & Medicaid Services (CMS) confirms that preferred cost sharing networks will continue to dominate Medicare Part D. Our exclusive analysis finds that for 2017, 73% of seniors are enrolled in Prescription Drug Plans (PDPs) with preferred pharmacy networks. The three biggest companies—Humana, UnitedHealthcare, and CVS Health's SilverScript—now account for 69% of enrollment in stand-alone Part D plans.

Below, we use the enrollment data to analyze the major pharmacy chains’ position within the 17 major multi-regional Part D plans with preferred networks. As you will see, Walgreens and Walmart are the big winners, while CVS and Rite Aid lag far behind.

As long as pharmacies are willing to accept lower reimbursements in exchange for increased store traffic, preferred networks will continue to grow. For 2017, Walgreens’ aggressive partnering strategy looks likely to result in significant prescription market share gains.

THE DATA

You can find data on Prescription Drug Plan (PDP) enrollment here: Medicare Advantage/Part D Contract and Enrollment Data. These data reflect enrollments accepted through December 9, 2016. The open enrollment period ended on December 7, 2016, so the numbers should accurately reflect 2017 trends.

Last October, I identified the Medicare Part D prescription drug plans (PDP) with preferred network structures. See Preferred Pharmacy Networks Are Back in 85% of the 2017 Medicare Part D Plans. My evaluation includes only stand-alone PDPs. The final sample included 71 Part D plans, operating 746 regional PDPs. See my original article for further details on the methodology.

THE PLANS

For 2017, 85% of the total regional PDPs had preferred networks. Based on the initial enrollment figures, these 633 PDPs enrolled 14.9 million people, or 73% of the PDP total through December 9, 2016. That’s slightly lower than last year’s figure of 75% of PDP beneficiaries enrolled in a preferred plan.

The top 10 companies (shown below) account for 93% of enrollment. This figure is slightly higher than the 2016 figures.
[Click to Enlarge]

The top three parent organizations—Humana, UnitedHealthcare, and CVS Health's SilverScript—account for 69% of enrollment in stand-alone Part D plans. Here are the initial 2017 results from the largest plan sponsors:
  • Humana is offering the same three plans that it has for the past three years: Humana Enhanced, Humana Preferred Rx Plan (its original plan with Walmart), and the co-branded Humana Walmart Rx Plan. All three plans have a preferred network and are being offered in all 34 regions. As of January 2017, these three plans collectively have 5.0 million (24.5%) of total Part D enrollees. That’s 12% higher than Humana’s 4.5 million total from January 2016.
  • UnitedHealthcare is offering four plans in 2017: two AARP-branded plans, a co-branded AARP MedicareRx Walgreens plan, and Symphonix Value Rx. The AARP-branded plans have preferred networks with 24,000 pharmacies, while the AARP-Walgreens plan has only 8,000 Walgreens and Duane Reade stores as preferred pharmacies. These plans have 4.8 million (23.3% of) enrollees, which is higher than the plans’ 4.6 million initial enrollment figures for 2016.
  • CVS Health’s SilverScript offers one plan with an open network (Choice) and one plan with a preferred pharmacy network (Plus). The SilverScript Choice plan was the largest open network plan in 2017 and has 4.3 million members, up 10% from January 2016. By contrast, the SilverScript Plus preferred network plan has only 194,000 enrollees, or 1.0% of total enrollment.
THE PHARMACIES

In Walgreens Plays to Win: Our Exclusive Analysis of 2017's Part D Preferred Pharmacy Networks, we examined pharmacy participation in the 17 major multi-regional Part D plans with preferred networks. Based on the initial enrollment figures, these plans enrolled 13.7 million people, or 91% of the total beneficiaries enrolled in a preferred plan.

We can therefore use these data to measure each chain’s position in the 2017 preferred networks. The chart below shows the total enrollment in the plans for which each chain is a preferred pharmacy.

[Click to Enlarge]

The data quantify the relative position of the major retail chains:
  • Walmart is a preferred pharmacy in only 12 of the 17 major preferred cost sharing networks. However, 12.3 million people are enrolled in plans with Walmart as a preferred pharmacy. Walmart benefits from being the only national chain in the Humana Walmart Rx Plan, which enrolled 2.2 million people.
  • For 2017, Walgreens is preferred in 15 of the 17 plans—more than any other retail chain. Based on the initial enrollment data, 11.4 million people signed up for the 15 plans in which Walgreens is a preferred pharmacy. Walgreens is the only national chain in the new AARP MedicareRx Walgreens plan, which enrolled 313,000 people.
  • CVS Health’s retail pharmacies are preferred in only two major plans—its own SilverScript Plus plan and the Magellan Rx Medicare Basic. Only 286,000 people signed up for these two plans.
One potential upside for CVS: Part D beneficiaries who qualify for the Low-Income Subsidy (LIS) face low out-of-pocket drug costs regardless of a pharmacy’s preferred status. Nonetheless, it looks like Walgreens will gain significant prescription market share in 2017. That's the fact, Jack.

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