Friday, January 18, 2013

Brand New 2013 Part D Data: Nearly Half of Enrollees Chose Preferred Pharmacy Networks

Last night, the Centers for Medicare and Medicaid Services (CMS) released the first batch of 2013 enrollment data for Medicare Part D Prescription Drug Plans (PDPs). These close-to-final numbers offer an exclusive Drug Channels first look at the PDP winners and losers.

The highlights:
  • Sixteen of 2013's 190 PDPs have a preferred pharmacy network design.
  • More than 4 out of 10 seniors enrolled in one of these 16 plans.
  • The Humana Walmart-Preferred Rx Plan is now the fourth-largest PDP.
  • Walgreen is a preferred pharmacy in plans with 30% of total PDP enrollment.
  • SmartD, the Walgreens-plus-independents plan, was a bust.
Part D beneficiaries annually choose their own new plan, rather than having a benefit administrator or insurance plan provide a few choices for them. Thus, these new data convincingly demonstrate the consumer appeal of preferred networks. This year’s Part D market should dispel any doubts about the narrow network revolution.


Last October, I identified the following 16 Medicare Part D prescription drug plans (PDP) with preferred network structures.
Five new plans launched for the 2013 open enrollment period. Some of other 11 PDPs did not have preferred networks in 2012, but adopted this network design for 2013. All of them give a Medicare Part D beneficiary the option of using other pharmacies. Any copayment or coinsurance will, however, be higher at a non-preferred pharmacy.

Data on PDP enrollment are available from this CMS page: Medicare Advantage/Part D Contract and Enrollment Data. Note that these data reflect enrollments accepted through December 5, 2012. The final numbers may be slightly different, because the open enrollment period ended two days later (on December 7, 2012).


There were 190 PDPs with non-zero enrollment as of December 5, 2012. Total PDP enrollment was 21.3 million people. The 16 plans with preferred pharmacy networks enrolled 9.3 million people, or 43.5% of the total. Here’s a summary of the 16 PDPs with preferred pharmacy networks:

Observations and scorecard:
  • Humana-Walmart wins again. The Humana Walmart Preferred Rx Plan, which launched in October 2010, is the fourth-largest PDP, with 8.2% of total PDP enrollment. Compared to January 2012, total enrollment increased by 349,827 seniors (+25.1%).
  • The Aetna-CVS plan won, too. The Aetna CVS/pharmacy Prescription Drug Plan—the only other PDP co-branded with a chain pharmacy—boosted enrollment by 103,812 (+31.3%). Note that this plan is only one-quarter the size of the Humana-Walmart plan.
  • Walgreen joined the preferred bandwagon. In 2013, Walgreen wisely decided to be a preferred pharmacy in the Coventry, Humana, UnitedHealthcare, and SmartD plans. In 2013, plans with Walgreens as a preferred pharmacy account for 30.4% of total PDP enrollment, and 69.8% of preferred pharmacy network enrollment. 
  • Walgreen’s SmartD plan was a bust. The SmartD Rx plans attracted a mere 45,854 seniors, or 0.2% of total PDP enrollment. These plans are offered by RxAlly, a new pharmacy group that claims to have about 14,000 independent pharmacies plus Walgreens drugstores. Walgreen is the major investor behind RxAlly and SmartD.
In 2013, narrower pharmacy network models will become a mainstream staple of both commercial and Medicare Part D plans. Expect these networks’ success to prompt howls of protest from the non-participating pharmacies.

To read more on narrow networks, see the section starting on page 115 of the new 2012–13 Economic Report on Retail, Mail, and Specialty Pharmacies.

P.S. Check out the latest edition of the Health Wonk Review for some great policy analysis.

CORRECTION: An earlier version of this article incorrectly stated the percentage of plans with Walgreen as a preferred pharmacy.


  1. One more item: In contrast to Walgreen, CVS will have limited
    participation in preferred Part D networks. 

    In addition to the Aetna/CVS plan, CVS is also a preferred pharmacy in the two CVS-owned SilverScript plans.Combined, the three plans accounted for only 3.9% of total PDP enrollment, and 9.0%
    of preferred pharmacy network enrollment.

  2. Should anyone be shocked by this? When the average American is given a choice of paying ZERO or a few dollars for medications if they chose to go go Pharmacy A versus having a higher copay at Pharmacy B, C , D or X then the majority will want to go to the Pharmacy with the lower copay. What will be troubling for these seniors is around March, when they tire of waiting 6 hours to get those Rx's filled at Walmart and then they transfer those RX's out to another Pharmacy they will become disenchanted with the fact that they are forced to pay higher copays at a Pharmacy that offers them the service levels that they desire. Another issue is the fact that federal dollars are going into a program that pushes Seniors,via collusion between insurance companies and chain drug stores, into a particular store. This is not only anti-competitive, it's anti American and it violates some states laws that have an any willing provider statute.