Medicare Part D

There have been a number of interesting activities recently in the Medicare Part D market.

Medicare Part D is the federally subsidized prescription benefit program provided to Medicare beneficiaries, citizens who are 65 years and older or who otherwise qualify through disability. Although there will be fewer PDP plan options available in most states, many beneficiaries will experience higher monthly premiums this year.

The first transaction to gain some attention was HealthSpring’s acquisition of Bravo Health, an operator of Medicare Advantage coordinated care plans in Pennsylvania, the Mid-Atlantic region, and Texas, and Medicare Part D stand-alone prescription drug plans in 43 states. This transaction moved HealthSpring/Bravo Health into the top 10 Part D providers.

The next activity garnered much more attention since Walmart was involved. Walmart as usual introduced low price options in the market. Humana Inc. announced an innovative Medicare Part D prescription drug plan, co-branded with Wal-Mart Stores that can provide significant savings on monthly plan premiums and prescription medicine copayments and cost-shares for Medicare beneficiaries, including seniors and people with disabilities. The Humana Walmart-Preferred Rx Plan (PDP) offers one low national monthly plan premium of 
$14.80.

The most recent transaction was CVS Caremark’s agreement to acquire the Medicare Part D business of Universal American for approximately $1.25 billion. Universal American is a leading Medicare Prescription Drug Plan (PDP) sponsor. The acquisition will more than double the size of CVS Caremark’s Medicare Part D program. Universal American’s Part D business currently serves approximately 1.9 million Medicare PDP members, while CVS Caremark serves approximately 1.2 million Medicare PDP members.

What type of response will other market participants have? Will we see additional consolidation in a market now dominated by UnitedHealth, Humana, and CVS Caremark/Universal American?