Book chapter
RETAIL PHARMACY MARKET STRUCTURE AND INSURER-INDEPENDENT PHARMACY BARGAINING IN THE MEDICARE PART D ERA
Advances in health economics and health services research, pp.295-316
Advances in Health Economics and Health Services Research, Emerald Group Publishing
01/01/2010
DOI: 10.1108/S0731-2199(2010)0000022016
PMID: 20575238
Abstract
Objective - To examine whether local area pharmacy market structure influences contract terms between prescription drug plans(PDPs) and pharmacies under Part D.
Data - Data were collected and compiled from four sources: a national mail survey to independent pharmacies, National Council for Prescription Drug Programs (NCPDP) Pharmacy database, 2000 U. S. Census data, and 2006 Economic Census data.
Results - Reimbursements varied substantially across pharmacies. Reimbursement for 20 mg Lipitor (30 tablets) ranged from $62.40 to $154.80, and for 10 mg Lisinopril (30 tablets), it ranged from $1.05 to $18. For brand-name drug Lipitor, local area pharmacy ownership concentration had a consistent positive effect on pharmacy bargaining power across model specifications (estimates between 0.084 and 0.097), while local area per capita income had a consistent negative effect on pharmacy bargaining power across specifications (-0.149 to -0.153). Few statistically significant relationships were found for generic drug Lisinopril.
Conclusion - Significant variation exists in PDP reimbursement and pharmacy bargaining power with PDPs. Pharmacy bargaining power is negatively related to the competition level and the income level in the area. These relationships are stronger for brand name than for generics. As contract offers tend to be non-negotiable, variation in reimbursements and pharmacy bargaining power reflect differences in initial insurer contract offerings. Such observations fit Rubinstein's subgame perfect equilibrium model.
Implication - Our results suggest pharmacies at the most risk of closing due to low reimbursements are in areas with many competing pharmacies. This implies that closures related to Part D changes will have limited effect on Medicare beneficiaries' access to pharmacies.
Details
- Title: Subtitle
- RETAIL PHARMACY MARKET STRUCTURE AND INSURER-INDEPENDENT PHARMACY BARGAINING IN THE MEDICARE PART D ERA
- Creators
- Yang Xie - University of IowaJohn M. Brooks - Univ Iowa, Coll Pharm, Iowa City, IA 52242 USAJulie M. Urmie - University of IowaWilliam R. Doucette - University of Iowa
- Contributors
- A Dor (Editor)
- Resource Type
- Book chapter
- Publication Details
- Advances in health economics and health services research, pp.295-316
- Publisher
- Emerald Group Publishing; BINGLEY
- Series
- Advances in Health Economics and Health Services Research
- DOI
- 10.1108/S0731-2199(2010)0000022016
- PMID
- 20575238
- ISSN
- 0731-2199
- Number of pages
- 22
- Language
- English
- Date published
- 01/01/2010
- Academic Unit
- Pharmacy Practice and Science
- Record Identifier
- 9984366038302771
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