I have a case of existential dread, and yet the world keeps spinning so let’s do this…

Caught my Eye

More Cowbell. Late last year I put out a report on biosimilars and it called out how the Inflation Reduction Act could hurt innovation and savings for biosimilars. Here is a report from Matrix Global Advisors that adds some numbers around that, unrealized annual savings 54 percent of brand sales per affected biologic.

Call Me Maybe? The Department of Health and Human Services postponed a meeting of the U.S. Preventive Services Task Force. This is the group that makes recommendations on preventative screenings, services, etc.

No Rebate for You. The Berkeley Research Group put on an issue brief that found that use of 340B is decreasing Medicaid rebates in a substantial way. Like $6.5B ways.

This week also saw announcement of the Medicaid cell and gene model for sickle cell, hospital outpatient rule (OOPS) and physician fee schedule (MPFS).  Honestly, no one has asked me any specific questions about them so I’m leaving them on the side of my desk for now.

Reviewing the Fundamentals – Why Standalone Prescription Drug Plans Matter

As we look ahead to 2026 premium announcements, there is concern about the standalone prescription drug plans (PDPs) premiums. Last year the Biden Administration swooped in with a last-minute demonstration program that stabilized premiums but there is no indication that there is an appetite to repeat the demonstration. But millions rely on the program and the stability of the program matters to them.

In 2025, approximately 23.2 million Medicare beneficiaries are enrolled in standalone PDPs. Over time there has been a big swing over to the managed care side with increasing enrollment in Medicare Advantage Prescription Drug Plans (MA-PD plans), but they aren’t for everybody. There are four groups I want to call out — those who just like the flexibility of original fee-for-service Medicare (Original Medicare) (which then would require a PDP for prescription drug coverage), those that live in rural areas, those with Medigap and those in some employer-based plans.

Rural Populations

While most Medicare beneficiaries live in urban areas, a majority of those residing in the nation’s most rural areas are enrolled in Original Medicare, not Medicare Advantage. In 2025, according to the Kaiser Family Foundation, nearly 6 in 10 (58%) of Medicare Part D enrollees living in the most rural areas are enrolled in standalone PDPs.  

This trend is even more pronounced in certain states. For instance, in eight states 75% or more of their most rural Part D enrollees relying on PDPs (these include Nevada, Alaska, Massachusetts, California, Kansas, Wyoming, Nebraska, and South Dakota). This highlights that PDPs are often the most practical, or sometimes the only, comprehensive prescription drug coverage option for many rural beneficiaries. The reasons for this disparity can include:

• Limited MA-PD Plan Choices: Rural areas often have fewer Medicare Advantage plan options.
• Provider Network Preferences: Individuals in rural areas may prefer the freedom to choose any provider under Original Medicare without being restricted by a Medicare Advantage plan’s network, which might not include their preferred local doctors or specialists.
• Historical Enrollment Patterns: Some beneficiaries may have simply continued with Original Medicare and PDPs out of familiarity or because it met their needs.

Medigap Enrollees

As Medigap plans generally do not include prescription drug coverage, beneficiaries who have a Medigap policy and Original Medicare must enroll in a standalone PDP to get Part D coverage. This is a very common combination. In 2022, 42% of those in Original Medicare (which totals 12.5 million beneficiaries) had a Medigap policy.

This group chooses Medigap for its comprehensive coverage of Original Medicare’s cost-sharing (deductibles, coinsurance), combined with the flexibility of Original Medicare and the added drug coverage from a PDP.

Employer-Sponsored Coverage

Less common, but still in use, employers may offer a standalone PDP to their retirees. This is typically done when the employer wants to provide drug coverage but still allows retirees to remain in Original Medicare for their medical benefits. This option preserves the flexibility of Original Medicare for medical care while ensuring drug coverage.

Importance of Maintaining Access to PDPs

The continued availability and stability of standalone PDPs are crucial for several reasons, especially when compared to the growing enrollment in MA-PD plans:

• Choice and Flexibility: PDPs are the only way for beneficiaries to get Medicare Part D prescription drug coverage if they choose to remain in Original Medicare.
• Addressing Unique Needs: Some beneficiaries, particularly those with complex health conditions or who frequently travel, may find Original Medicare with a PDP and Medigap to be a better fit. MA-PD plans often have network restrictions and prior authorization requirements that can be challenging for these individuals.
• Serving Specific Populations: As highlighted, PDPs are disproportionately used by beneficiaries in rural areas. Limiting PDP options would create significant access issues for these populations, who may already face challenges with healthcare

For the Files

• Novel Drug Approvals Tracking