Search results

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 20mg Lipitor (30 tablets) ranged from $62.40 to $154.80, and for 10mg 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.

Two major reform movements have shaped child and adolescent mental health services over the past quarter-century: the Systems of Care movement, and more recently, the movement toward evidence-based practice. Results from several studies indicate that youth served in traditional residential or inpatient care may experience difficulty re-entering their natural environments, or were released into physically and emotionally unsafe homes (Bruns & Burchard, 2000; President's Commission on Mental Health, 1978; Stortz, 2000; Stroul & Friedman, 1986; U.S. Department of Health and Human Services, 1999). The cost of hospitalizing youth also became a policy concern (Henggeler et al., 1999b; Kielser, 1993; U.S. Department of Health and Human Services, 1999). For example, it is estimated that from the late 1980s through 1990 inpatient treatment consumed nearly half of all expenditures for child and adolescent mental health care although the services were found not to be very effective (Burns, 1991; Burns & Friedman, 1990). More recent analyses indicate that at least 1/3 of all mental health expenditures for youth are associated with inpatient hospitalization (Ringel & Sturm, 2001).