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Showing posts with label Medicare Part D. Show all posts
Showing posts with label Medicare Part D. Show all posts
For years, Medicare Part D plans often preferred high-list/high-rebate branded multiple sclerosis (MS) drugs over lower-cost generics. That was rational behavior inside an irrational system.
The Inflation Reduction Act (IRA) offers one example of how incentives can change behavior in the system. New research in JAMA Health Forum reveals a significant reversal in Medicare Part D formulary coverage for MS drugs. After years of plans favoring brand-name drugs over generics, 2025 formularies shifted to near-universal generic coverage.
However, in return patients got narrower formularies, higher upfront costs, and way more taxpayer dollars spent than expected.
While this wasn’t the case for all drug classes, in MS, the IRA Part D redesign has forced plans to care more about net drug spending. Below, we analyze the formulary data and explain why the coverage patterns changed so abruptly—and what new tradeoffs have emerged.
Football season is officially back. Personally, my signal is hearing my uncle curse about bad calls from 1,000 miles away, but you may have already seen a game.
This news roundup is short enough to fit into an ad break or two. *Caveat: may lead to rabbit holes that take much longer than an ad break.
Drug Channels Institute is proud to host the 2027 Drug Channels Leadership Forum, which will take place from March 15–17, 2027, in Miami. Request your invitation to this invite-only gathering of senior leaders from across the drug channel ecosystem. You must request an invitation to be considered for attendance. We will begin sending invitations in mid-October.
PBM-affiliated private label biosimilars would seem to have a built-in formulary advantage. But for ustekinumab, that advantage has not carried over to Medicare Part D.
A recent JAMA Network Open study identified 12 ustekinumab products available for formulary coverage in early 2026. Yet the average Part D plan covered only 2.3 biosimilars. Even more surprising, PBM affiliated private label products were largely missing from formularies connected to their corporate siblings.
CVS Health’s Cordavis labeled Pyzchiva received no Part D coverage. Optum Rx’s Nuvaila labeled Wezlana appeared in just 0.4% of UnitedHealth plans.
The results run against the conventional logic of vertical integration. If a PBM can influence formulary placement, why not direct volume toward its own product like in commercial formularies? The answer lies in the Inflation Reduction Act’s (IRA) Part D redesign, which made the economics of an affiliated private label biosimilar potentially less attractive in Medicare than in the commercial market.
Below, we follow the incentives that help explain why PBM-affiliated biosimilars remain largely absent from Medicare Part D formularies.
The United States has almost 8,000 fewer retail pharmacies than it did in 2018, and more than 2,000 closed in 2025 alone. Rite Aid has liquidated. Walgreens is working through a multi-year plan to shutter hundreds of stores. CVS has trimmed hundreds more.
Yet total U.S. prescription dispensing revenues for all dispensing formats reached a record $751 billion in 2025, up 10% from 2024.
Record closures and record revenue in the same year may seem contradictory, but national totals obscure very different effects on the community. The impact of the retail pharmacy shakeout on patient access has become geographically K-shaped: dense markets can absorb pharmacy closures with little loss of patient access, while rural communities can lose their only nearby pharmacy.
The economic pressures on pharmacies are similar across the country. The access consequences of a closure are not. Below, we examine what is driving the shakeout and why geography determines which communities can absorb them.
In late June, the boffins at the Centers for Medicare & Medicaid Services (CMS) released the latest projections for U.S. spending on healthcare. (See links below.) These data provide the latest official, nonpartisan look at the future of U.S. healthcare spending.
Notably, overall U.S. spending on drugs dispensed by retail and mail pharmacies will remain about 9% of overall healthcare spending.
Below, we outline the factors that led to the dramatic revision to Medicare spending, along with insights on the shrinking role of private insurance and consumer out-of-pocket spending.
Taxpayers—primarily via Medicare and Medicaid—now account for a majority of U.S. prescription drug spending, outstripping the share financed via employer-sponsored insurance.
For years, Medicare Part D plans often preferred high-list/high-rebate branded multiple sclerosis (MS) drugs over lower-cost generics. That was rational behavior inside an irrational system.
The Inflation Reduction Act (IRA) offers one example of how incentives can change behavior in the system. New research in JAMA Health Forum reveals a significant reversal in Medicare Part D formulary coverage for MS drugs. After years of plans favoring brand-name drugs over generics, 2025 formularies shifted to near-universal generic coverage.
However, in return patients got narrower formularies, higher upfront costs, and way more taxpayer dollars spent than expected.
While this wasn’t the case for all drug classes, in MS, the IRA Part D redesign has forced plans to care more about net drug spending. Below, we analyze the formulary data and explain why the coverage patterns changed so abruptly—and what new tradeoffs have emerged.
Spring has officially arrived at Drug Channels' worldwide headquarters in beautiful downtown Philadelphia. (Photo proof at right.) So, dive into this month’s curated crop of noteworthy news:
Since this article was published last December, Net Pricing Drug Channel developments have accelerated. Manufacturers reduced the list prices for 6 of the 10 products with an MFP for 2026. They have also preemptively reduced list prices for three products that will have MFPs in 2027 and 2028. For more on these trends, see Section 12.1.1. of our new 2026 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.
Contrary to popular belief, the Inflation Reduction Act’s (IRA) maximum fair prices (MFPs) could temporarily boost profits for retail pharmacies serving Medicare Part D patients.
As I show below, retail pharmacies risk becoming collateral damage from significant deflation in the gross-to-net bubble for drugs subject to an MFP. Welcome to our bonkers healthcare system—where everyone wants lower prices, until they actually get them.
What’s more, list price cuts will reduce profits from 340B contract pharmacy operations, while weakening covered entities’ main objections to a 340B rebate model. Get ready for a 340B slowdown.
On March 24, 2026, Drug Channels Institute will release The 2026 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. This report—our seventeenth edition—remains the most comprehensive, fact-based tool for understanding the entire U.S. drug pricing, reimbursement, and dispensing system. If you make strategic decisions in this industry, this report belongs on your desk.
12 chapters, 500+ pages, 270 exhibits, and nearly 1,300 endnotes. No other resource matches the scope, depth, and rigor of this resource.
We are offering you the opportunity to preorder the thoroughly updated, revised, and expanded 2026 edition at special discounted prices. Preordering guarantees early access and locks in the lowest available price. Those who preorder will receive a download link before March 30.
Special preorder and launch pricing discounts will be valid through April 6, 2026. After that date, prices increase. Secure your discount now.
The report was researched and written by the Drug Channels Institute team, led by Adam J. Fein, Ph.D. As shown below, the 2026 edition delivers unmatched depth and breadth. The numbers indicate the report chapter that corresponds to, explains, and analyzes each channel flow.
The 2026 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers contains the most current market and industry data available, including DCI’s annual analyses of the market positions of the largest pharmacies, specialty pharmacies, and PBMs. Throughout the report, we have added new industry data, deepened our coverage of many topics, and expanded our analysis of emerging trends.
This definitive, nonpartisan report will aid pharmaceutical manufacturers, wholesalers, pharmacists, pharmacy owners, hospital executives, pharmacy buyers, benefit managers, managed care executives, policy analysts, investors, consultants, and anyone else who wants to understand and benefit from this ever-changing industry. If your organization competes, negotiates, invests, or sets policy in this market, this report will sharpen your strategy.
There are many notable updates in this 2026 edition, including:
A new Section 4.3.4. analyzes manufacturers’ direct-to-patient (DTP) websites and TrumpRx within the broader context of patient-paid prescriptions.
A new Section 5.5. deconstructs the three largest PBMs’ gross profits. Some of this material previously appeared in Chapter 11.
Material in Section 7.1., Section 9.1., and Section 9.3. reflects the PBM legislative reforms contained within the Consolidated Appropriations Act, 2026 (P.L. 119-75), which became law in February 2026.
Material in Section 8.4. and Section 9.3. incorporates implications of the 2026 settlement between Express Scripts and the Federal Trade Commission.
A new Section 6.3.3. reviews research on how the IRA’s implementation has affected out-of-pocket spending by Medicare Part D beneficiaries.
A new Section 11.2.4. analyzes pharmacies’ dispensing profits under the Inflation Reduction Act of 2022 (IRA).
A new Section 12.1.4. evaluates the potential implications of most favored nation (MFN) and tariff policies on the drug channel.
In Section 12.3.1., our illustration of major vertical business relationships among drug channel businesses now incorporates affiliated third-party administrators (TPAs) and administrative services only (ASO) platforms.
We have also improved our presentation of material about the IRA and the 340B Drug Pricing Program.
Thank you for your interest in our work. If you have any questions before purchasing a license to the report, please email me. We look forward to supporting your team’s success in 2026.
The Centers for Medicare & Medicaid Services (CMS) has just released its initial 2026 data on enrollment in Medicare Part D prescription drug plans (PDPs).
DCI’s exclusive analysis shows that 83% of seniors remain enrolled in PDPs with preferred pharmacy networks—essentially unchanged from 82% in 2025, but sharply lower than the 99% peak in 2023. Meanwhile, the number of major Part D plans offering preferred networks has fallen to a record-low eight.
The new enrollment data reveal a clear shift in competitive positioning: Albertsons and Publix are now preferred in every major plan. Walgreens is holding strong. Walmart—the company that invented the Part D preferred network model—has slipped to the middle of the preferred pack.
Meanwhile, smaller pharmacies have fully abandoned PDPs’ preferred networks in 2026.
At the same time, the IRA’s expansion of the Low-Income Subsidy (LIS) means a growing share of beneficiaries have little financial incentive to use a preferred pharmacy at all. Add in the PBM reforms in the Consolidated Appropriations Act of 2026, and the preferred network model will gradually lose relevance.
The boffins at the Centers for Medicare & Medicaid Services (CMS) recently dropped the latest National Health Expenditure (NHE) data, which track all U.S. spending on healthcare. (Links below.)
We spent an astounding $5,278,588,000,000 on healthcare in 2024. Yes, that’s $5.3 trillion!
Retail outpatient prescription drugs accounted for less than 9% of that total. More than half of net outpatient drug spending was paid by federal, state, and local government programs. Below, we delve into the spending trends, which reveal the impact of the Inflation Reduction Act (IRA) on Medicare spending, the boom in healthcare marketplaces, and the post-pandemic bust in Medicaid.
Contrary to what you might read, the government’s data show that drug spending growth was not driven by purportedly “skyrocketing” drug prices. In reality, nearly all of the increase in drug spending reflected higher utilization—more people treated, more prescriptions dispensed, and shifts among drugs dispensed—rather than higher net prices.
Prices may grab headlines, but utilization—and taxpayers—are driving the spending story. When prices stop being signals, markets stop being markets.
Whoa. The 340B Drug Pricing Program has once again given new meaning to the word “skyrocketing.”
For 2024, discounted purchases under the 340B program reached a record $81.4 billion—an astounding $15.1 billion (+23%) higher than 2023. The gross-to-net difference between list prices and discounted 340B purchases—a proxy for funds available to covered entities—also grew, to $66.4 billion (+$6.0 billion). Hospitals again accounted for 87% of 340B purchases.
How big is the program? 340B purchases are now more than 50% larger than Medicaid’s net prescription drug spending. The program now accounts for nearly one-fifth of the total U.S. gross-to-net bubble.
But thanks to the Inflation Reduction Act (IRA), 340B’s day of reckoning is coming soon. I expect 2026 to be the first year of structural 340B pressure as the Centers for Medicare & Medicaid Services (CMS) continues its regulatory takeover of the 340B program. What’s more, I expect the program’s out-of-control growth rate to slow and for some long-overdue transparency to enter this notoriously opaque program.
Read on for our full analysis—and why the 340B swell may finally be breaking.
Over the summer, the boffins at the Centers for Medicare & Medicaid Services (CMS) released the latest projections for U.S. spending on healthcare. (See links below.) These data provide the latest official and apolitical look at the future of U.S. healthcare spending.
The top line projections highlight the government’s official view that prescription drugs dispensed by retail and mail pharmacies will have a modest impact on U.S. healthcare costs.
However, there are some notable changes from the previous forecast. CMS now expects that the Inflation Reduction Act’s changes to the Medicare Part D program will have a greater impact than previously projected, while private insurers will find drug costs creeping higher.
Below, we outline the four major takeaways from the latest projections, which continue to show that taxpayers—primarily via Medicare and Medicaid—will continue to dominate the employer-sponsored insurance market. And like it or not, vertically integrated insurers, PBMs, specialty pharmacies, and providers will continue to prosper.
Contrary to popular belief, the Inflation Reduction Act’s (IRA) maximum fair prices (MFPs) could temporarily boost profits for retail pharmacies serving Medicare Part D patients.
As I show below, retail pharmacies risk becoming collateral damage from significant deflation in the gross-to-net bubble for drugs subject to an MFP. Welcome to our bonkers healthcare system—where everyone wants lower prices, until they actually get them.
What’s more, list price cuts will reduce profits from 340B contract pharmacy operations, while weakening covered entities’ main objections to a 340B rebate model. Get ready for a 340B slowdown.
For more on the intended and unintended consequences of the IRA—and its interplay with 340B—join me for my live video webinar, Drug Channels Outlook 2026, on December 12, 2025, from 12:00 p.m. to 1:30 p.m. ET.
As I’ve been warning for years, the Inflation Reduction Act of 2022 (IRA) has nearly obliterated the stand-alone Medicare Part D prescription drug plan (PDP) market.
DCI’s exclusive analysis of Center for Medicare & Medicaid Services’ (CMS) data reveals:
The number of PDPs has plummeted by 55% since the IRA’s passage, to a record low of 360 plans for 2026.
Preferred cost-sharing pharmacy networks are disappearing, with their share falling to the lowest level since 2014. That’s a post-IRA net loss of 505 plans with these networks.
Just five companies—Aetna, Health Care Service Corporation, Humana, UnitedHealthcare, Wellcare—will account for 94% of all PDPs in 2026. In recent years, four major plan sponsors—Cigna, Clear Spring Health, Elevance Health, and Mutual of Omaha—have exited the PDP market.
See the charts below and our analysis of the remaining national players, along with updated data on preferred networks in Medicare Advantage prescription drug (MA-PD) plans.
Even with the demonstration program handouts, the Part D market is increasingly fragile: fewer choices, greater concentration, and massive disruption for beneficiaries.
Thanks, IRA! 🙃
What else should you expect for 2026? Find out during my upcoming live video webinar, Drug Channels Outlook 2026, on December 12, 2025, 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.
Eeek! It’s time for the Drug Channels Halloween roundup of terrifying tales from the dark corners of the healthcare system. Gather your favorite demon hunters and help maintain the Honmoon. This month’s tricks and treats include:
Drug Channels Institute is proud to host the 2026 Drug Channels Leadership Forum, which will take place from March 16–18, 2026, in Miami. Check out the agenda and request your invitation to this invite-only gathering of senior leaders from across the drug channel ecosystem. You must request an invitation to be considered for attendance. We will begin sending invitations in mid-October.
This week, I’m rerunning some popular posts while I prepare for Friday's live video webinar: 
