Prior Milliman research found a sharp rise in NLI specialty drug use in 2024.1 Our new findings from Milliman Medicare Market Intelligence (MedIntel) show that the NLI specialty drug trend continues to climb in 2025. Figure 1 shows the individual Medicare Part D NLI specialty gross drug cost per member per month (PMPM) from January 2023 through February 2025.
Figure 1: NLI specialty drug spend PMPM
Source: Milliman MedIntel Insights.
A deeper look at rising costs
Although utilization propelled much of the 2024 surge, early 2025 data suggest unit costs and drug mix are contributing more to gross drug cost increases. Oncology drugs remain the largest contributor to NLI specialty trend. High-cost dermatological and anti-inflammatory treatments also add to rising expenditures, though to a lesser extent.
Figure 2 places this NLI specialty trend in context by illustrating non-specialty NLI gross drug cost trend, low-income (LI) specialty gross drug cost trend, and employer group waiver plan (EGWP) NLI specialty gross drug cost trend. It shows that while some cost pressures exist across all groups, the pace of NLI individual specialty drug trend is distinct.
Figure 2: PMPM trend by income status and drug type
| Income Status and Drug Type | YTD25 / 1Q24 | 1Q24 / 1Q23 |
|---|---|---|
| NLI individual specialty | 43% | 12% |
| NLI individual non-specialty | 6% | -6% |
| LI individual specialty | 10% | 2% |
| NLI EGWP specialty | 13% | 9% |
Source: Milliman MedIntel Insights.
Specialty drug trends for NLI EGWP beneficiaries did not increase as much as trends for individual NLI beneficiaries in early 2025. EGWP benefit designs are generally richer than most individual Medicare Part D offerings. This suggests the 2025 Inflation Reduction Act (IRA) benefit redesign may be a primary driver of the 2025 trend that we observe.
We found similar levels of NLI individual specialty gross drug cost trend by plan type (PDP vs. MAPD) from 2023 through early 2025.
Figure 3 breaks out the components of the gross drug cost trend into utilization and unit cost for a deeper understanding of what is driving the PMPM trend. Change in drug mix is reflected in unit cost trends below.
Figure 3: Components of NLI specialty drug trend
| Trend Component | YTD25 / 1Q24 | 1Q24 / 1Q23 |
|---|---|---|
| Utilization | 25% | 14% |
| Average Unit Cost | 14% | -1% |
| PMPM | 43% | 12% |
Source: Milliman MedIntel Insights.
This shows that while NLI specialty utilization trend increases by 25% between 1Q2024 and 1Q2025, the rising utilization is concentrated on higher cost drugs – increasing the average unit cost by 14% over the same period. While brand list prices may increase annually and somewhat contribute to the higher average unit cost, the 14% increase in average unit cost is primarily driven by a shift in drug mix.
Additional considerations
Significant claims trend for a singular plan sponsor often suggests adverse selection, but data show this rise is spread across the market rather than isolated to a few plan sponsors. As a result, these elevated trends do not appear to stem from an influx of higher-risk beneficiaries into specific plans.
The IRA introduced a new $2,000 annual out-of-pocket (OOP) cap on beneficiary spending in 2025. Several other factors could also affect NLI specialty drug trend. We did not study causality but found value in identifying potential externalities for future investigation.
Manufacturer Patient Assistance Programs (PAPs). In general, PAPs operate outside the Part D benefit, but changes to PAPs and additional requirements that must be met to enroll in these programs could shift financial responsibilities from some manufacturers to the Medicare program.2
Medicare Prescription Payment Plan (M3P) elections. While early 2025 M3P elections do not appear to be significant in number, this program may ease immediate financial pressures on patients by spreading beneficiaries’ cost of drugs over the year.3 This could, in turn, increase adherence and therefore the utilization of higher cost drugs.
Other externalities. New drug approvals, prescribing patterns, plan sponsor formulary decisions, and changes in the pharmacy supply chain could also drive specialty trend pressures.
Our approach
We drew on emerging claims data from Milliman MedIntel, built on the CMS 100% Research Identifiable Files (RIFs), enriched with additional data sources, and curated to serve many Medicare stakeholders, including payers, pharmacy benefit managers, pharmaceutical manufacturers, and providers. The platform updates with as little as two weeks’ lag, giving subscribers near real-time insights. We used RIF data from January 2023 through February 2025 with runout through March 2025, capturing claim costs for all beneficiaries enrolled in Medicare Part D.
Our analysis focuses on individual Medicare Part D. All figures and trends refer to the individual (non-EGWP) Medicare Part D population unless stated otherwise. We defined specialty drugs using Milliman’s Health Cost Guidelines™ (HCGs) specialty drug list to ensure consistency over our multi-year study.
Year-to-date February 2025 claims may not be fully complete. Past research shows that prescription drug event (PDE) claims are 95.6% complete after two months and 99.1% complete after three months.4 January 2025 and February 2025 may therefore see a further 0.9% and 4.4% rise, respectively, if claims follow historical completion patterns.
1 Cline, M., Madden, R., Holcomb, K. (April 2025). Part D Trend insights: 2024 trend analysis reveals sharp increase in specialty drug utilization among non-low income beneficiaries. Retrieved April 15, 2025 from https://www.milliman.com/en/insight/part-d-trend-insights-analysis-specialty-drug-utilization.
2 More information at https://www.pfizerrxpathways.com/updates.
3 Duke, D., Cline, M., Liner, D. (April 2025). MedIntel Insights: Early look at Medicare Prescription Payment Plan enrollment. Retrieved April 15, 2025 from https://www.milliman.com/en/insight/medintel-insights-early-look-m3p-enrollment.
4 Chronic Condition Data Warehouse (CCW). (2017, October). CCW White Paper: Medicare Claims Maturity. Retrieved April 14, 2025, from https://www2.ccwdata.org/documents/10280/19002256/medicare-claims-maturity.pdf.