The Coverage Design Behind Two Different Prices
Two Medicare beneficiaries can hold the exact same Part D plan, fill the exact same generic prescription on the same afternoon, and pay different amounts. The difference is often not the drug. It is the pharmacy counter they walked up to.
A nationwide analysis published in The American Journal of Managed Care found that as of 2024, roughly 31.8 percent of ZIP Code Tabulation Areas had no preferred pharmacy within the study's distance thresholds. Researchers from the University at Albany, State University of New York, measured 5 miles for urban areas and 15 miles for rural ones. They wrote that "many rural and urban areas in the US lack preferred pharmacies."
Preferred pharmacies are in-network locations that agree to lower negotiated prices in exchange for higher customer volume. Plans then set lower copays there. Every other in-network pharmacy is nonpreferred, which still covers the prescription but at a higher patient share.
This is a coverage design question, not a drug pricing question. The list price of the medication does not change between the two counters. What changes is the slice of it the plan asks the beneficiary to absorb.
Where the Gaps Cluster on the Map
The study mapped the shortfalls rather than averaging them away. Rural areas across the West North Central, Mountain, and East South Central census divisions were the most consistently short of preferred locations in both stand-alone drug plans and Medicare Advantage drug plans. Some urban areas came up short too.
Among areas that did have a preferred pharmacy, the added travel was modest. The mean distance to the nearest preferred pharmacy was 4.63 miles, and the extra distance compared with the nearest nonpreferred pharmacy averaged 0.64 miles. Average savings at the preferred counter came to $5.09 per fill in the study's measure.
The rural penalty persisted after adjusting for education, uninsured rate, race and ethnicity, and health professional shortage designation. In stand-alone plans, rural areas carried an additional 0.734 miles of extra distance, more than double the overall mean. In Medicare Advantage drug plans, the figure was 0.320 miles.
The authors also documented improvement. Access widened in both rural and urban areas between 2010 and 2024, particularly within Medicare Advantage. Areas with high shares of American Indian and Alaska Native residents, and high-share White rural areas, still trailed as of 2024.
Households Most Exposed to the Difference
Not every Medicare household feels this equally, and that distinction matters more than the headline percentage.
Beneficiaries in the low-income subsidy program, often called Extra Help, are largely insulated. In most cases, they pay the same copay whether the pharmacy is preferred or not. For them, the preferred designation is close to irrelevant.
The people most exposed are beneficiaries without the subsidy who fill several maintenance prescriptions each month. Prior research cited in the analysis estimated that these beneficiaries would spend roughly $147 less per year if every fill happened at a preferred pharmacy. Spread across a fixed income, that is real money, though it is an estimate from earlier work rather than a figure this study measured directly.
Medicare Advantage enrollees face a second layer. Because those plans bundle drug and medical coverage, switching plans to reach a better pharmacy network can disturb physician and hospital relationships at the same time. The researchers flagged that as a practical constraint that stand-alone plan members do not share.
Federal rules set network adequacy standards for in-network retail pharmacies overall. As CMS guidance reflects, the agency has monitored preferred cost-sharing access separately, and a 2015 CMS analysis found preferred pharmacies somewhat less accessible than nonpreferred ones.
Reading Your Own Plan's Pharmacy List
There is a concrete step available to households before the next open enrollment window. Every Part D and Medicare Advantage drug plan publishes a pharmacy directory that flags which locations carry preferred cost sharing. The label is not always obvious, and it can change from one plan year to the next even when the pharmacy has not moved.
Beneficiaries can call the number on the back of the plan card and ask directly whether a specific pharmacy is preferred for the coming year. Pharmacists can often confirm it as well. State Health Insurance Assistance Programs offer free one-on-one counseling for people comparing plans, and 1-800-MEDICARE can help identify local resources.
People who think they may qualify for Extra Help should check separately, since that determination is made independently of plan shopping and can eliminate the preferred versus nonpreferred question entirely.
Nobody should switch pharmacies for a few dollars if the current pharmacist knows their medication history, catches interactions, and is reachable by phone. Continuity has clinical value that a copay table does not capture.
Next Signals for Seniors and Regulators
The 2027 plan landscape files will show whether preferred networks continue contracting. Open enrollment runs from October 15 to December 7 each year, and that is the practical window for households to act on any of this.
The policy debate runs alongside a second problem. Separate research from the USC Schaeffer Center, published in Health Affairs, found pharmacies excluded from preferred networks were far more likely to close between 2014 and 2023. Senior scholar Dima Mazen Qato said the networks were "contributing to the growing problem of pharmacy closures." A Federal Trade Commission staff report on pharmacy benefit managers raised related concerns about patient steering.
The new study was funded by the National Institute on Aging through the Center for Aging and Policy Studies. The authors reported no financial conflicts of interest.
For most Medicare households, the practical takeaway is narrow and useful. Confirm the preferred status of your pharmacy before January, ask about it again at renewal, and treat a switch as a decision about cost and continuity together rather than cost alone.
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Frequently Asked Questions
What is a preferred pharmacy in Medicare Part D? It is an in-network pharmacy that has agreed with the plan to accept lower negotiated prices. The plan passes some of that along as a lower copay or coinsurance for the beneficiary.
Does a nonpreferred pharmacy still take my Medicare drug plan? Usually yes, if it is in network. The prescription is still covered. The patient share is simply higher than it would be at a preferred location.
Why do two people on the same plan pay different amounts? Because the cost sharing tier attached to the pharmacy differs. Geography determines which pharmacies are reachable, so where a person lives can decide which price they get.
Does this apply to people who get Extra Help? Generally no. Beneficiaries in the low-income subsidy program usually pay the same amount at preferred and nonpreferred pharmacies, so the distinction has little practical effect for them.
How do I find out if my pharmacy is preferred? Check the plan's pharmacy directory, call the number on your plan card, or ask the pharmacy directly. Status can change each plan year, so confirm at renewal.
Should I switch pharmacies to save money? That is a personal decision worth discussing with your pharmacist or clinician. Savings are often modest per fill, and continuity of care with a pharmacist who knows your medication list carries its own value.
Where can I get free help comparing plans? State Health Insurance Assistance Programs provide free counseling, and 1-800-MEDICARE can direct you to local assistance. Both are independent of any insurer.
