Prior Milliman research demonstrated rapidly rising specialty drug trends through the first quarter of 2025, concentrated in the non-low income (NLI) population. This edition of our trend series offers updated insights into the individual Part D and Employer Group Waiver Plan (EGWP) markets through the first half of 2025. We continue to observe increases in drug trends, particularly notable in specialty drug utilization trends within the NLI population. Several drug classes are experiencing substantial increases, with trends exceeding 50%. As discussed in an earlier report, isolating secular trends from any induced utilization driven by Part D benefit changes is challenging; however, we assume the trends observed between 2024 and 2025 for the individual Part D NLI population are driven primarily by the Part D benefit redesign included in the Inflation Reduction Act (IRA) of 2022,1 given the consistent differences in trends between the NLI and low income (LI) population.
Key findings
The total year-over-year allowed per member per month (PMPM) trend for NLI members is more than two times the LI trend.
Part D claims data from the first half of 2025 shows a 16% increase in total gross drug costs PMPM in the individual Part D market compared to the first half of 2024. Costs have consistently risen in aggregate, as 2H2024 emerged 8% higher than 1H2024, followed by an additional 7% increase in costs from 2H2024 to 1H2025.
When examined closer, the large trend is driven by the NLI population, which experienced a 27% increase in gross costs PMPM between 1H2024 and 1H2025 compared to an 11% increase for the LI population over the same period. Despite already significant growth throughout CY2024, NLI gross costs in 1H2025 were 17% above those in 2H2024. If this rate continues through 2H2025, it will result in an annual increase of 36% over 2H2024.
Figure 1 shows the change in total gross drug costs PMPM by half-year, looking at the first half of 2024 through the first half of 2025.
Figure 1: Individual Medicare Part D gross cost PMPM trends
The gap between NLI and LI specialty costs shrinks between 2024 and 2025.
NLI cost trends continue to be driven by increases in specialty drug utilization. In 2024Q1, LI specialty costs PMPM were 2.6 times greater than those of NLI members. Since then, NLI specialty trends have outpaced LI specialty trends, such that in 2025Q2, LI costs are only 1.8 times greater than those of NLI members. While LI specialty costs PMPM increased by 7% between Q1 and Q2 2025, NLI specialty costs increased by 18% over the same period.
Figure 2: Individual Medicare Part D specialty gross cost PMPM by income status
Several top drug classes have gross cost PMPM and utilization trends greater than 50%.
Figure 3 summarizes annual cost and utilization trends for top spending classes with the highest observed trends in the individual market. These trends include both NLI and LI populations. We note the trends isolated to NLI populations are higher than the average trends for all classes summarized.
Figure 3: Gross cost PMPM and utilization trends for therapeutic classes with the highest annual trends, 1H2025 vs. 1H2024
| Drug Class2 | Gross Cost PMPM |
Utilization |
|---|---|---|
| Antineoplastic Hormonal Agents - Non-Gender Specific | 107% | 79% |
| Atopic Dermatitis Biologics | 100% | 87% |
| Transthyretin Stabilizers | 78% | 81% |
| Antineoplastic Enzyme Inhibitor - NSCLC | 58% | 49% |
| Antineoplastic Hormonal Agents - Male | 56% | 30% |
EGWP specialty drug trends are much lower relative to NLI populations in the individual market.
NLI specialty trends for EGWP beneficiaries continue to emerge much lower compared to NLI beneficiaries enrolled in individual prescription drug plans (PDPs) and Medicare Advantage Prescription Drug (MAPD) plans. The group trends may be more indicative of secular utilization and unit cost trend, while the individual market trends likely reflect additional behavioral changes associated with the IRA benefit redesign, given how many EGWP plan designs have generally been less affected than those of the individual market.3
Figure 4: NLI specialty trends by plan type, 1H2025 vs. CY2024
| Plan Type | 1H2025 Specialty Cost PMPM |
CY2024 Specialty Cost PMPM |
Specialty Cost PMPM Trend |
Utilization Trend |
|---|---|---|---|---|
| PDP | $183 | $130 | 41% | 38% |
| MAPD | 120 | 85 | 41% | 20% |
| EGWP | 245 | 214 | 14% | 11% |
Conclusion
The continuation of rising NLI Part D costs throughout 2025 and a notably more subdued LI Part D cost trend creates imbalances between 2025 expected costs and revenue for Part D plans. Additionally, the 2025 RxHCC model is calibrated using lagged Part D claim data from CY2022 and is therefore predicated on the relationship between NLI and LI Part D gross claim costs remaining generally consistent between 2022 and 2025. This may place additional premium pressure on plan sponsors looking ahead to 2027, as 2025 claim experience will be used as the baseline for pricing.
Data and methodology
Milliman Medicare Market Intelligence (MedIntel) provided the data underpinning this white paper. The MedIntel platform is built upon the Centers for Medicare and Medicaid Services’ (CMS’s) 100% Research Identifiable Files (RIF), highly enriched with supplementary data assets, and curated to address the needs of all Medicare stakeholders (plan sponsors, pharmacy benefit managers, manufacturers, providers, and others). Data is refreshed with as little as two weeks of lag, offering MedIntel subscribers near real-time insights to support their business needs. We relied on RIF data from January 2024 through June 2025, including claim costs from 100% of beneficiaries enrolled in Medicare Part D excluding those enrolled in certain unique plans, such as the Program of All-Inclusive Care for the Elderly (PACE) or Limited Income Newly Eligible Transition (LI NET) Program. For more information, contact your Milliman consultant.
Qualifications
Guidelines issued by the American Academy of Actuaries require actuaries to include their professional qualifications in all actuarial communications. The authors are members of the American Academy of Actuaries and meet the qualification standards for rendering the actuarial opinions contained herein.
1 The 2025 Part D benefit redesign instituted a maximum out-of-pocket (MOOP) of $2,000, significantly reducing member liability.
2 Classes with “Antineoplastic” in the name generally refer to oncology therapies. Atopic Dermatitis Biologics include drugs such as Dupixent. Transthyretin Stabilizers include drugs such as Vyndamax and Vyndaqel.
3 While there is significant variability among employer group plan design offerings market, these plan designs tend to be more generous than those of in the individual market. For example, pre-IRA many plans already included MOOP limits, and many offer copays on brand and specialty drugs.