KFF: Medicare Advantage Drug Plans Received Over 600 Dollars Per Member in Rebates That Standalone Drug Plans Cannot Access

A built-in feature of how Medicare pays for prescription drug coverage gives Medicare Advantage drug plans a financial advantage that standalone Part D prescription drug plans cannot match, according to a KFF analysis published June 11, 2026. The finding helps explain why the standalone drug plan, or PDP, market has been contracting even as the overall Medicare population grows.

In 2026, Medicare Advantage drug plan sponsors received more than 600 dollars per enrollee in rebates from drug manufacturers, or more than 50 dollars per member per month, which they could apply toward lower premiums or richer drug benefits. Standalone PDP sponsors do not receive these same rebates under the current payment structure, leaving them unable to match the cost advantage that Medicare Advantage drug plans can offer.

The market shift is visible in plan availability. Five years ago, the average Medicare beneficiary had roughly equal access to standalone drug plans and Medicare Advantage drug plans, about 30 PDP options versus 27 Medicare Advantage drug plan options. By 2026, that ratio had reversed: the average beneficiary had about 11 standalone options but 32 Medicare Advantage drug plan options.

KFF notes the dynamic has stakes beyond convenience. Beneficiaries who prefer Original Medicare depend on standalone PDPs for drug coverage. As that market shrinks, their choices narrow. With the Part D premium stabilization demonstration ending after 2026, premium pressure on the remaining 360 standalone plans is expected to intensify in 2027.