How Medicare Advantage Rebates Disadvantage Medicare’s Stand-Alone Drug Plan Market

(Authors: Juliette Cubanski, Jeannie Fuglesten Biniek, Meredith Freed, and Tricia Neuman for The Kaiser Family Foundation Published: Jun 11, 2026)

The Medicare Part D prescription drug benefit was designed to offer Medicare beneficiaries the choice of drug coverage from either stand-alone prescription drug plans (PDPs) for people in traditional Medicare or Medicare Advantage prescription drug plans (MA-PDs) that offer both medical and drug benefits, with plans competing on premiums, coverage, and cost sharing. Increasingly, however, PDPs and MA-PDs are competing on uneven terms, in part because the payment system for Medicare Advantage plans enables MA-PDs to lower Part D premiums or reduce Part D cost sharing, making drug coverage from Medicare Advantage plans appear considerably cheaper, or even premium-free, to the beneficiary. The payment advantage for MA-PD sponsors makes it harder for PDP sponsors to compete on premiums, which may be especially challenging when all Part D plan sponsors are facing more cost pressures associated with a redesigned Part D benefit that shifted more costs onto plans and the loss of rebates for selected drugs under the Medicare Drug Price Negotiation program. Continue reading here…

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