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

Abstract

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.