Comparison of the claim percent gross margin earned by Texas community independent pharmacies for dual-eligible beneficiary claims before and after Medicare Part D.

OBJECTIVES

To describe dual eligibles' claims before and after Medicare Part D and to evaluate the effect that Medicare Part D has had on the claim percent gross margin (CPGM) earned by Texas community independent pharmacies.

DESIGN

Nonexperimental time series study.

SETTING

Texas, October 2005 through September 2006.

PARTICIPANTS

313 community independent pharmacies.

INTERVENTION

Review of more than 150,000 Medicaid and 300,000 Medicare Part D claims acquired from a drug claims processor.

MAIN OUTCOME MEASURES

CPGM per prescription claim before and after the implementation of Medicare Part D, controlling for generic/brand drug status.

RESULTS

The mean CPGM for prescriptions dispensed before Part D (Medicaid claims) was 26.7%. The mean CPGM for claims dispensed after Part D (Medicare claims) was 17.0% (using ingredient costs in 2006 dollars) or 20.4% (using ingredient costs adjusted to 2005 dollars), a reduction of 36.3% and 23.6%, respectively. Under both Medicaid and Part D, pharmacies earned higher margins for generic drugs (39.9% and 29.5%, respectively) than for brand-name drugs (8.7% and 8.3%, respectively).

CONCLUSION

These results support community pharmacy assertions of lower reimbursements from Part D payers compared with Medicaid payers. Based on these results, pharmacies can respond to this evolving environment by carefully reviewing their Part D plans' impact on CPGM and taking available steps to increase the proportion of generic drugs dispensed to Medicare beneficiaries.