Tuesday, February 14, 2012

The 2012 Part D Market: The Big Get Bigger

Following last week’s look at preferred pharmacy network plans, I got multiple requests for a broader market overview of 2012 enrollment data for Medicare Part D Prescription Drug Plans (PDPs). On Valentine's Day, what could be more romantic than a Part D day!

Below, I present a summary of the largest Part D plans and parent organizations. The big story is enrollment concentration:
  • The top 10 Part D plans include 68% of enrollees in a stand-alone plan.
  • Three companies—UnitedHealthcare (NYSE: UNH), CVS Caremark (NYSE: CVS), and Humana (NYSE: HUM)—now operate plans for almost 6 out of 10 enrollees.
Despite this concentration, PBMs such as SXC's InformedRx (NASDAQ: SXCI) or CatalystRx (NASDAQ: CHSI) have minimal Part D penetration. Is yesterday's CatalystRx/AARP (non-Part D) deal a signal of things to come?


For general background, see Kaiser’s fact sheet: The Medicare Prescription Drug Benefit.

Here is an overview of the 193 PDPs with non-zero enrollment as of January 12, 2012. Click the table to enlarge it.

The top 10 individual PDPs had 68.1% of enrollees, a slight increase from 2011. As I discuss in Humana-Walmart Preferred Network Plan Wins Big in Part D, 2 of the top 10 plans have a preferred pharmacy network design.


A parent organization can sponsor multiple PDPs. Here are the top 10 PDP parent organizations as of January 12, 2012. The top 10 represent 87% of all enrollees in a stand-alone plan and 71% of plans.

The enrollment share of the top 3 parent organizations grew from 48% in 2011 to 57% in 2012. However, this macro figure obscures significant share changes among the big 3 sponsors:
  • UnitedHealth lost almost 500,000 enrollees. Despite the loss, the sheer scale of UnitedHealth's Part D business has provided the platform for its OptumRx business.
  • CVS Caremark’s share grew by 2.1 million enrollees, due to the acquisition of Universal American and HealthNet, plus organic growth of 207,000 enrollees.
  • Humana added more than 519,000 enrollees thanks to its alliance with Walmart.
Due to this ever-growing concentration, manufacturers will be negotiating with more powerful Part D plans. Of course, this market-based outcome didn’t deter President Obama's DOA budget from proposing government-mandated Medicaid rebate levels for low-income Part D enrollees. So much for competition!

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