Patient Access
Kevin Willmann
Nonpreferred Medicare Part D pharmacies were 70% to 350% more likely to shutter their doors than preferred ones, according to findings from a May 2025 Health Affairs study.
These closures could impact low-income Black and Hispanic neighborhoods where independent and chain pharmacies are less likely to be preferred.
According to the findings, only 28.8% of low-income, 31.3% of Black, and 32.8% of Hispanic neighborhoods had preferred pharmacies compared to 45.1% of higher-income and 45.2% of white neighborhoods. Additionally, neighborhoods with greater proportions of Medicare-insured populations and lower private-to-public insurance ratios were also less likely to have preferred pharmacies for most Medicare Part D plans.
“Preferred” pharmacies
The creation of preferred pharmacies was a strategy by PBMs “to steer patients to specific pharmacies, leverage their negotiating power for pharmacy reimbursements, and increase their profits,” said study coauthor Dima M. Qato, PharmD, who is with the University of Southern California.
“A plan will have a list of in-network pharmacies of which some are preferred and others are not. If a patient uses a preferred pharmacy in the network, their co-pay is often lower than if they use another nonpreferred pharmacy,” Qato said.
According to the study, the percentage of Medicare Part D stand-alone preferred drug plans using preferred pharmacies jumped from 70.2% in 2014 to 97.7% in 2023. Similarly, Medicare Advantage prescription drug plans using preferred pharmacies rose from 15.6% to 43.8% in the same time frame.
When looking at pharmacies in the United States, the study found the proportion of pharmacies preferred by at least 50% of plans increased from 10.9% to 42.3% in the same period. The 2023 breakdown showed 41.1% of pharmacies preferred by less than 50% of plans; 12.5% “nonpreferred”; and 4.0% were “out-of-network.”
The study authors linked pharmacies using their ZIP codes to data from the National Center for Health Statistics and the Census Bureau’s American Community Survey. These data measure demographics—race, ethnicity, and income below the federal poverty level—as well as the percentage of uninsured, Medicare insured, ratio of private to public insurance, and pharmacies per 10,000 people. Low-income neighborhoods referenced in the study are neighborhoods where more than 20% of the population lives below the federal poverty level.
“We were interested in identifying potentially modifiable policy-relevant factors associated with pharmacy closures,” Qato said.
More findings
While 83.4% of pharmacies nationwide participated in Medicare Part D preferred networks (preferred for at least one plan), the study found that 171 counties with a population of 1.1 million individuals had no pharmacies participating in Medicare Part D preferred pharmacy networks.
Although independent pharmacies made up 39.7% of U.S. pharmacies in 2023, only 0.8% were preferred by most Medicare Part D plans, compared to 69.6% of chain pharmacies preferred by most plans.
During the same period of 2014 to 2023, researchers found that 34.5% of pharmacies preferred by less than 50% of plans, 25.3% of nonpreferred, and 66.5% of out-of-network were more likely to close than pharmacies preferred by most plans. Qato said other factors, such as higher drug costs as well as low Medicare reimbursement rates for pharmacists also matter in pharmacy closures, as they directly or indirectly are a function of PBM operations and business practices.
What can be done?
Researchers noted that 26 states have at least one county without pharmacies who are preferred by Medicare D plans.
According to Qato, strengthening PBM regulation would help, since they determine pharmacy networks and reimbursement rates for most Part D plans. In addition, she said expanding PBMs’ managed preferred pharmacy networks to include independent pharmacies would help.
“Especially those in neighborhoods that are or are at risk of becoming pharmacy deserts [to ensure] equitable pharmacy reimbursement rates for Medicare Part D Prescriptions, especially for ‘critical access pharmacies’ in low-access or pharmacy desert neighborhoods,” she said. ■