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Impact of Generic and Therapeutic Interchange Incentives on Community Pharmacy
Impact of Generic and Therapeutic Interchange Incentives on Community Pharmacy The revenue receivedfor dispensing a prescription through the Coordinated Care Network, even with the fflost optifflistic estimates, is much less than the cost of dispensing the prescription. by Norman V. Carroll, PhD
Introduction One important trend affecting community pharmacies in recent years has been the growth of third party coverage of prescription drugs. In 1972, third party providers paid for only 18.5% of prescription medications dispensed in commu-
Abstract The purpose of this project was to estimate the increase in revenues that the average community pharmacy could expect from generic and therapeutic interchange bonuses provided by PAID Prescriptions, Inc.'s Coordinated Care Network. Data from the published literature and conversations with managed care experts and PAID employees were used to develop estimates for bestguess, worst-case, and best-case scenarios. Estimates were based on data from early 1994. It was estimated that the interchange bonuses would increase the average community pharmacy's revenues by an average $105 per year, a $0.55 increase in the dispensing fee. Best-case and worse-case estimates were $227 and $44 for increases in revenues. These were equivalent to $1.19 and $0.23 increases in the dispensing fee. Even with the most optimistic estimates, the total fee paid by the Coordinated Care Network (the sum of the dispensing fee plus interchange bonuses) is much less than the average pharmacy's cost of dispensing a third party prescription.
Vol. NS35, No.7 July 1995
nity pharmacies.! Third party providers' share of the market grew slowly until 1985, when it stood at 28.4%.2 By 1993, for the flfst time, third parties paid for the majority of prescription medications dispensed in community pharmacies. 3 Third party coverage of prescription medications has had a major impact on the profitability of community pharmacies. According to the 1992 Lilly Digest, pharmacies with high percentages of third party prescriptions have lower gross and net profits than do pharmacies with lower percentages. 4 This stands to reason. Third party programs typically reimburse pharmacies for medications at prices considerably lower than those paid by noninsured patients. In addition, pharmacies incur higher costs in dispensing third party prescriptions. 5,6 Thus, prescriptions covered by third party programs are less profitable than are those dispensed to private-pay patients. This situation obviously does not bode well for the continued economic viability of community pharmacy. If third party payments continue to grow, and if third party margins remain low, it is unlikely that community pharmacy can continue to exist as it is currently practiced. Community pharmacy's best strategy for the future may lie in decreasing its reliance on revenues from dispensing, by becoming involved in managing patient outcomes. Both patients and third party payers benefit from pharmacist services that decrease the costs and improve the effectiveness of drug therapy. This strategy will work, however, only if pharmacists are successful in receiving fair and adequate compensation for outcomes-management activities. AMERICA PHARMACY
PAID Prescriptions, Inc., established the Coordinated Care Network in 1993. The Network compensates phannacies for performing a variety of outcomes-management functions. Phase I of the program, which began on January 1,1994, pays pharmacies for controlling drug costs by increasing use of generic and preferred formulary products. Specifically, pharmacies are offered $ 5 for each prescription medication converted from a nonformulary product to a formulary product (the "therapeutic interchange bonus"), a $0.50 addition to the normal dispensing fee for each generic prescription product dispensed ("generic dispensing bonus"), and 20% of the incre-
mental savings for each prescription medication switched from a brand-name product to a generic product ("generic switch bonus"). PAID's willingness to pay pharmacists for nondispensing functions is a major, positive step for community pharmacy, but the question remains, How much will payment for these services, at this level, affect the economic viability of community pharmacy? This project was undertaken to estimate the increase in revenues that the average community pharmacy could expect to realize from the Coordinated Care Network's Phase I bonuses.
Table 1
Analysis of the Effect of Interchange Incentives on Pharmacy Revenue Parameter
Estimate
Sources
Annual prescription volume (1994)
33,290
1992 prescription volume of between 28,000 and 34,500 and 2% growth rates in 1993 and 19944,7,8
PAID percentage of annual prescription volume
3.80/0
Total community pharmacy prescription volume of 1.7 billion9 and PAID's published statement that it handled 65 million prescriptions through its retail network in 1992
Network percentage of PAID prescription volume
150/0
PAID managers' projection that 100/0 to 20% of total volume would come through the Network- in 1994
Maximum rate of generic drug use: generic prescriptions as a percentage of total prescriptions
690/0
IMS data indicating that 31% of prescriptions were written and dispensed with single-source products in 19929
Base rate of generic drug use for 1994, 1995, 1996, 1997
43%,46%, 49%,52%
Hermant Shah estimated generic use rates for 1994 and 1995. 9 ,10 The same rates of increase were assumed for 1996 and 1997.
Year-end generic use rate
48%
The maximum use rate is assumed to be 690/0. This was unlikely to be attained because employee pharmacists (as opposed to pharmacies) lack incentives to dispense generics and because data indicate that substantial numbers of patients purchase brand-name prescription products even when they have to pay substantially more to do SO.11
Average prescription price
$26
Based on an average prescription price of $23 in 1992 and 6% increases in 1993 and 1994.4,7
Average brand-name prescription price
$31.71
Average generic prescription price
$17.44
Based on an average prescription price of $26, a 45% differential between brand-name and generic products,12-14 and the assumption that the average prescription price was based on a mix of 400/0 generic and 600/0 brand-name products
Average savings per generic substitution
$14.27
Difference between average brand-name and generic prescription prices
Percentage of plans offering a generic bonus
50%
A guess. Sensitivity analysis indicates the total bonus is insensitive to this estimate.
Increase in forlnulary compliance
5%
PAID indicates that only 18% of products currently dispensed are for nonformulary products. Thus, the maximum possible increase is 18%.
I
IMS = IMS America; Network = Coordinated Care Network; PAID = PAID Prescriptions, Inc.
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Vol. NS35, No.7
Methods and Materials
macy's gross revenue from bonus payments will increase. The equivalent increase in the fee, on the other hand, should remain constant as volume changes. The fee increase is calculated by dividing the increase in gross revenue attributable to bonus payments by the number of prescriptions dispensed. The information in Figure 1 illustrates how the estimates
Data for the study were taken from the published literature and conversations with managed care experts and PAID employees. Data from the literature consisted primarily of market research data compiled by Walsh America/ PMSI, of Phoenix, Ariz.; MarFinancial Impact of Pharmacy Interchange Incentives ket Measures, of Livingston, N.J.; and IMS America, of PlyCoordinated Care Networlc prescription volume mouth Meeting, Pa., and pub33,290 Average pharmacy's total annual prescription volume lished in American Druggist, x 3.80/0 PAID percentage of total prescription volume Drug Topics, and Pharmacy Times. (For key assumptions 1,273 Total PAID prescription volume and data sources for each estix 150/0 Network percentage of PAID prescription volume mate used in calculations, see 191 Annual PAID Network prescription volume Table 1. For detailed descripGeneric dispensing bonus " " tions of sources of data, procedures, and assumptions, 191 Annual PAID Network prescription volume see box, pages 32-33.) x 45.5% Average percentage of generic prescriptions* Data from these sources 87 Generic prescriptions dispensed were used to estimate the x $0.50 Per-prescription bonus revenue that the average community pharmacy could $43.45 Generic dispensing bonus expect to receive as a result Generic switch bonus of the three performance 480/0 bonuses: generic dispensing, Year-end generic use rate generic switch, and thera430/0 Base generic use rate peutic interchange. Estimates 50/0 Improvement in generic use were made for best-guess, 191 x Annual PAID Network prescription volume worst-case, and best-case sce10 t Increase in generic Network prescriptions dispensed narios. For each scenario, x 500/0 Percentage of plans offering generic switch bonus estimates were made for the 5t fIrst year of the program and Number of prescriptions eligible for bonus for three subsequent years. 14.27 x Average savings per generic switch Estimates were expressed $68.11 Total savings from generic switches as both the gross dollar rev200/0 x Pharmacy percentage of savings enue that the average phanna$13.62 Pharmacy generic switch bonus cy could expect to receive and the average increase in Therapeutic interchange bonus " ' . " ". dispensing fee resulting from 191 Annual PAID Network prescription volume the increased revenue. The 5% x latter estimate was made Improvement in formulary compliance rate 10t because it is more stable. Number of therapeutic interchanges Increases in gross revenue are $5.00 Bonus per interchange directly related to a pharma$47.73 Total therapeutic interchange bonus cy's volume of prescriptions $104.79 Total bonus per year covered by the Coordinated $0.55 Care Network. As the NetEquivalent increase in dispensing fee work grows in prescription * Calculated as average of base and year-end rates. volume, or as a pharmacy t Numbers are rounded up. Calculations are based on unrounded numbers. attracts more of the NetNetwork = Coordinated Care Network; PAID = PAID Prescriptions, Inc. work's beneficiaries, the phar-
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Table 2
rate for generic use for the coming year. 1his rate is their best estimate of what generic use would be in the cOming year without any pharmacy incentives, taking into considImpact eration factors such as drugs Increase in coming off patent and normal, Increase in Generic Equivalent Formulary expected increases in generic Dispensing Rate Increase in Compliance from use over time. At the end of Above Base Line Dispensing Fee Scenario Previous Year (%) ($) (0/0) the year, PAID calculates the year-end generic use rate for Worst case , :" .::' each plan. If the year-end use o 0.23 Year 1 rate for the plan is higher than the base rate, a generic switch 0.23 o o Year 2 bonus will be paid. 0.25 o o Year 3 This procedure is followed fot each plan in the Network. 0.26 o Year 4 o An individual pharmacy is Des.t case ' paid a bonus for a particular plan if (1) the generic use rate 1.19 15 Year 1 10 for the plan exceeded the 1.16 o Year 2 8 base rate and (2) the generic use rate for the pharmacy 1.13 o Year 3 6 stayed the same or exceeded 1.08 Year 4 o 3 the base rate. A pharmacy's bonus, if paid, is proportional to its impact on the plan's 0.55 Year 1 5 5 increased use of generics. The base rate for generic Year 2 0.70 3 3 use is reset every year. Thus, 0.70 Year 3 o o the potential for realizing the bonus decreases with each Year 4 0.66 o o successive year as the actual Best guess ,witl1 minimal imllrove.uents rate approaches the total percentage of orders for which 0.55 Year 1 5 5 generics can be used. 0.52 Year 2 o 2 Because an individual pharmacy cannot determine its 0.50 Year 3 o o own bonus, the estimate of the 0.51 Year 4 o o revenue from this bonus is based on an approximation (Figure 1). The generic switch bonus is optional for individual plan were made. Estimation of the generic dispensing and therasponsors. A number of plan sponsors mandated generic subpeutic interchange bonuses are straightforward; estimation of stitution before the Network was created. Thus, these sponthe generic switch bonus is more complex. sors had no incentive to offer a generic switch bonus after joining the Network. Estimation of Generic Svvitch Bonus PAID's method of calculating the generic switch bonus is Sensitivity Analyses complex. An individual pharmacy cannot estimate its bonus We analyzed the sensitivity of the total dispensing bonus (the from its own performance data. PAID calculates the bonus in the sum of the generic dispensing, generic switch, and therapeutic following way. At the beginning of each year, PAID representainterchange bonuses) to estimates of each of the following: the tives meet with each plan sponsor, and they jointly set a base
Impact of Generic and Therapeutic Interchange Incentives on ComRlunity Pharmacy for Years 1-4 of Progranl Operation
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phannacy's annual increase in use of generic and formulary products, the average savings realized when switching from a brand-name product to a generic, and the percentage of plan sponsors offering the generic switch bonus.
Table 3
Best- and Worst-Case Analyses of Financial Impact of Interchange Incentives Incentive
Impact ($)
Worst case: Assumes a 1 % increase in number of generic products dispensed, average savings of $12 per generic switch, and no increase in dispensing of formulary products.
$2.29
Generic switch bonus
$41.53 Generic dispensing bonus Bonuses for 0.00 Therapeutic interchange bonus Subsequent Years $43.82 Total bonus $0.23 Equivalent increase in dispensing fee Several scenarios were examined to determine the Best case: Assunles a 10 increase in number of generic products dispensed, average savings of $20 per generic switch, and 15% increase in likely amount of the total perdispensing of formulary products. formance incentive in the $38.19 Generic switch bonus second and subsequent years $45.82 Generic dispensing bonus $143.20 Therapeutic interchange bonus of the Network program. The $227.21 Total bonus assumptions made about $1.19 Equivalent increase in dispensing fee increases in generic and therapeutic interchange are shown in Table 2. Estimates were made for the worst-case, best-case, and best-guess scenarios. The methods of estimaTable 4 tion were the same as those shown in Figure 1. %
Effects of Changes in Selected Variables on Bonus from Generic and Therapeutic Interchange
Results Variable
An average pharmacy could expect an additional $105 in rev-
enue from performance bonuses offered by the Network during the fu-st year of program operation. Of this amount, $43 would come from the generic dispensing bonus, $14 from the generic switch bonus, and $48 from the therapeutic interchange bonus. In the worst case, a pharmacy that did little to achieve the performance bonuses might gain up to $44 (Table 3). The increase would come primarily from the generic dispensing bonus. In the best case, a pharmacy with very high levels of performance would increase annual revenue by $227. As suggested earlier, pharmacies that dispensed higher volumes of Network prescriptions would see proportionately higher revenues from performance bonuses. To state these figures another way, the average pharmacy would add $0.55 to its dispensing fee as a result of the performance bonuses. The comparable worst-case and best-case figures are $0.23 and $1.19 per prescription dispensed, respectively. Estimated bonus amounts for subsequent years of the program differed only minimally from first-year estimates. These estimates are shown in Table 2. The sensitivity analyses indicated that a pharmacy's total bonus is not particularly sensitive to either the average savings per generic substitution or the percentage of plans offering the generic switch bonus (fable 4). The lack of sensitivity occurs
Increase in Gross Revenues ($)
Increase in generic products dispensed 1% 5% 10% 15%
Equivalent Increase in Dispensing Fee ($)
104.79 118.41 132.03
$0.49 0.55 0.62 0.69
Average savings per generic sl/Vitch $ 10.00 12.00 15.00 20.00 25.00
100.71 102.62 105.48 110.26 115.03
0.53 0.54 0.55 0.58 0.60
Plans offering generic sl/Vitch bonus 25% 50% 75% 90%
97.98 104.79 111.60 115.69
0.51 0.54 0.58 0.61
Increase in formulary products dispensed 0% 5% 10% 15% 20%
57.06 104.79 152.51 200.25 247.99
0.30 0.55 0.80 1.05 1.30
$ 93.89
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because these variables affect only the generic switch bonus. Under most reasonable assumptions, this bonus is small, relative to the generic dispensing and therapeutic interchange bonuses. The total bonus is more sensitive to the rate of increase in generic drug use. The greater sensitivity occurs because the rate of improvement affects both the generic switch bonus and the generic dispensing bonus. The total bonus is very sensitive to changes in the rate of improvement in formulary compliance. A difference in this rate of 5 percentage points is equivalent to a $0.25 increase in the dispensing fee. Thus, the most critical variable of those analyzed is the rate of improvement in formulary compliance.
Conclusions and Discussion The results indicate that the average community pharmacy could increase its dispensing fee by $0.23 to $1.19 as a result of the Coordinated Care Network's bonus payments for generic and therapeutic substitution. To put these numbers in perspective, they can be compared with the dispensing fee the Network offers pharmacies. The Network has two levels. In Level I, the reimbursement rate is higher, but pharmacies do not serve all Network plans. The Level II fee is the lower reimbursement rate that pharmacies must accept for the opportunity to serve all plans
Sources of Data and Estimates Prescription Volume Esthnates
Average prescription volume: Estimates published in American Druggist, 7 Lilly Digest, 4 and Drug TopicS> put the average pharmacy's prescription volume in 1992 at between 28,000 and 34,500. Growth in prescription volume in the recent past has ranged from -0.2% to 4% a year. 4,7 The 1994 estimate is based on a 1992 volume of 32,000 prescriptions and 2% growth rates for 1993 and 1994. These figures yield an estimated prescription volume in 1994 of 33,290. PAID percentage: In a mailing to community pharmacies announcing the Coordinated Care N etwork, PAID Prescriptions, Inc., stated that it handled 65 million prescriptions through its retail network in 1992. Published estimates put total prescription volume handled by community pharmacies at 1.7 billion for 1992.9 Thus, PAID handled about 3.8% of the average community pharmacy's prescription volume in 1992. Without more current information, or information about changes ~n PAID's share of the market, the 3.8% estimate is the best available. Annual PAID volume was calculated as 3.8% of the 33,290 total prescriptions dispensed by the average pharmacy in 1994. Annual PAID Coordinated Care Network volume: Discussions with PAID managers indicated that between 10% and 20% of PAID's prescription volume would come through the Network in 1994. Thus, the annual number of Network prescription orders processed by the average community pharmacy was calculated as 15% of the annual PAID volume of 1,273 prescriptions. Calculation of Generic Bonuses
Maximum generic use: IMS data9 for 1992 provided the following breakdown of new prescription volume:
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• 31 % written and dispensed with single-source . products. • 16% written and dispensed with generic products. • 53% written for brand-name multisource products. These data indicate that the maximum rate of generic use, calculated as generic prescriptions dispensed divided by total prescriptions dispensed, would be 69%. Base generic use rate: Published estimates indicate generic use rates of 33% to 37% in 1992 for the total retail market. 9,10 Hennant Shah, a generic-industry analyst, estimates the generic rates of use for the retail market to be 40% in 1993,43% in 1994, and 46% in 1995. 9 Using these estimates, base generic use rates of 43%, 46%, 49%, and 52% for 1994,1995, 1996, and 1997, respectively, were calculated. Year-end generic use rate: The maximum possible year-end generic use rate would be 69%. This would represent a 26% increase over the base generic use rate. For a number of reasons, few pharmacies are likely to approach this maximum. First, pharmacies have probably already accomplished all the easy or simple generic conversions. Those remaining will require greater effort. Second, a large number of pharmacies in the Network will be chain pharmacies whose pharmacists have less incentive than do independent pharmacists to initiate generic conversions. They face the inconvenience of gaining the approval of both the physician and patient but, in most cases, receive no financial reward for doing so. Also limiting maximum use of generics is some patients' refusal to accept generic medications. Phillips and Jacobs 11 have reported that in 30% of cases, consumers in the Oklahoma state employee insurance plan
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enrolled in the Network. Currently, the Level II dispensing fee paid by the Network is the average wholesale price (AWP) less 12% plus $2.25. If we assume that AWP minus 12% is close to a pharmacy's actual acquisition cost, then the $2.25 dispensing fee represents the amount pharmacies have available to cover expenses and generate a profit. Adding the bonus payments would increase total reimbursement (the fee plus the bonus) from $2.25 to between $2.48 and $3.47. The latter figure is a healthy increase. However, most estimates put the cost of dispensing a third party prescription medication at between $6 and $ 7. 5,6 Thus, even with the most optimistic estimates, total reimbursement (the fee plus the
purchased brand-name products rather than less expensive generics even though they had to pay the price difference out of pocket. This occurred in more than 19% of instances where the price difference exceeded $20. On the basis of these considerations, a year-end rate of 48% and an improvement rate of 5% have been assumed. Average prescription price: The average prescription price in independent pharmacies was reported to be $22.44 in 1991, according to the 1992 Lilly Digest. 4 Increases in the average price were around 10.5% for 1989 to 1991.4 American Druggist reported average prescription prices of around $23 for 1992; this figure shows an increase of 4.2% for independents and 7.2% for chains over 1991 prices. 7 Assuming an average price of $23 in 1992 and increases of 6% in 1993 and 1994, the 1994 average price would be about $26. Average Generic and Brand Prices
A number of studies conducted in the late 1980s estimated the savings gained by switching from a brandname product to the comparable generic. 12-I4 The savings ranged from 37% to 50%, with most estimates being around 40%. Steven Schondelmeyer, director of the University of Minnesota's PRIME Institute, reported that Medicaid data from the fourth quarter of 1992 indicate a 60% savings. 15 On the basis of these estimates, we used 45% as the savings a payer would realize when a generic substitution occurred. For 1993, about 40% of prescription medications dispensed were generic products and 60% were brand-name products. -From these figures, and the estimated 45% generic savings per prescription, the
bonus) is inadequate to cover pharmacy costs. Increases in the number of prescriptions dispensed for Network beneficiaries would expand pharmacies' revenues but would not affect the unfavorable discrepancy between total reimbursement per prescription and the cost of dispensing. Furthermore, these estimates reflect increases in revenue, not changes in net profit. To generate increased revenues from the bonuses, many pharmacies may have to increase labor costs. Pharmacists must take the time to speak with patients and physicians before making generic and therapeutic interchanges. Extra staff, and thus additional expense, may be needed to provide pharmacists in high-volume outlets with the time required for these extra communications.
average brand and generic prices can be estimated as follows: Where A = average, Rx = prescription price, B = brandname price, G =generic price, and GS =generic savings per prescription, ARx = 0.6(AB) + O.4(AG), AG = AB(1.0 - 0.45), ARx = 0.6(AB) + 0.4(0.55 AB), ARx = 0.82 AB, AB = ARx/0.82, AB = $26/0.82 = $31.71, AG =AB(1.0 - 0.45), AG = $31.71 x 0.55 = $17.44. AGSJRx = AB - AG. AGSJRx = $31.71 - $17.44 = $14.27. Percentage of Plans Offering Generic Bonus
A number of Network plans mandate generic substitution, so they have no incentive to offer a bonus program. The figure of 50% used in the analysis is simply a guess. The sensitivity analysis shows that the total bonus is fairly insensitive to this estimate. Improvenlent in Formulary Compliance
PAID says that only 18% of products currently dispensed are nonformulary products. This fact limits the increase in compliance that a pharmacy can achieve. Few pharmacies will attain compliance rates approaching 100%, for a number of reasons, including those limiting the rate of generic substitution. Also, therapeutic conversions are likely to take more time and effort to accomplish than are generic switches. On the basis of these considerations, an increase in formulary use of 5% has been assumed.
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Thus, the evidence from this study indicates that payments offered by PAID may not be a sufficient incentive for pharmacies to participate. However, PAID could probably afford to provide higher incentive payments. Incentives for dispensing generic products now include a dispensing bonus of $0.50 per generic medication dispensed and a generic switch bonus of 20% of the savings realized on generic interchanges. PAID's way of administering the switch bonus, however, makes it unlikely that pharmacists receive anywhere near 20% of the savings. PAID and the plan sponsors factor in a generic improvement rate for each year. Only increases in generic interchanges above this rate are subject to the bonus. In addition, the pharmacy receives the switch bonus only if the plan's rate of generic use exceeds the anticipated improvement rate. Thus, a pharmacy could dramatically improve its generic interchange rate and yet not receive a bonus because the plan's rate did not improve sufficiently. Finally, not all plans within the Network offer the switch bonus. As a result of these factors, pharmacies actually receive much less than 20% of the estimated $14.27 in average savings generated by each generic interchange. In examining this issue, the more important question is, Why do pharmacies receive, at best, only 20% of savings which they generate through generic interchange? A higher percentage incentive would increase pharmacies' revenues and could increase plan sponsors' savings by generating higher levels of generic interchange. The analysis reported here was conducted during early 1994. Since that time, some of the estimated parameters as well as the Network's payments for generic and therapeutic substitution may have changed. However, it is unlikely that such change has had a substantial effect on the overall results and conclusions of this study. The bonuses estimated in this study were only the first efforts by PAID and other pharmacy benefits management companies to involve pharmacists in patient outcomes management. Phase II of the Coordinated Care Network offers to pay pharmacists for functions more related to patient care
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and less related to dispensing, such as counseling elderly patients and those with asthma. Further research is needed to project the effects of these and similar incentives on the eco· nomic viability of community pharmacy. Norman V. Carroll, PhD, is professor ofPharma(), administration, School ofPharmacy, Virginia Commonwealth University, Medical College of Virginia, Richmond. This research was supported by the American Pharmaceutical Association.
References 1. Third parties pay for lout of every 4 Rxs. Am Drug. August 1975; 172:56. 2. Slowdown continues in Rx dept gains; number dispensed increases by less than 1%. Am Drug. May 1986;193:80-4. 3. Senter DR. Prescription trends survey. Am Drug. June 1994;201 :23-6.
4.
Lilly Digest 1992: Survey of 1991 Operational Data. 60th ed. Indianapolis: Eli Lilly and Company; 1992:1-38.
5. Carroll NV. Cost of dispensing private-pay and third-party prescriptions in independent pharmacies. J Res Pharm Econ. 1991 ;3:3-16. 6. Schafermeyer KW, Thomas JI, Schondelmeyer SW. An Assessment of Chain Pharmacies' Costs of Dispensing a Third Party PrescriptionFinal Report. Lafayette, Ind: Pharmaceutical Economics Research Center; 1990. 7. Senter DR, Schondelmeyer SN. Prescription trends survey. Am Drug. 1993;208(1):31-4. 8.
Ukens C. Home health care, mail order lead pharmacy gainers. Drug Topics. 1993;137(17):15-6.
9. Glaser M. On the move again. Drug Topics Special Supplement: Generics-The View Ahead. 1993;137:6s-12s. 10. Salma R. Market forces usher in a 'golden age' of generic drugs. Pharm Times. 1994;160(1):48--50. 11. Phillips CR, Jacobs EW. Patients pay for brand names. Pharmaceutical Executive. 1994;14(2):56-64. 12. Bloom BS, Wierz DJ, Pauly MV. Cost and price of comparable branded and generic pharmaceuticals. JAMA. 1986;256:2523-30. 13. Dyckman Z. Generic and Brand Name Drug Prices-An Updated Look at the Evidence. Columbia, Md: Center for Health Policy Studies; 1987:1-19. 14. Dyckman Z. A Review of 'Cost and Price of Comparable Branded and Generic Pharmaceuticals'-Are Public Policies Which Promote Use of Generic Drugs Cost Effective? Columbia, Md: Center for Health Policy Studies; 1987:1-15. 15. Schondelmeyer SW. Personal communication, February 1994.
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Introduction One important trend affecting community pharmacies in recent years has been the growth of third party coverage of prescription drugs. In 1972, third party providers paid for only 18.5% of prescription medications dispensed in commu-
Abstract The purpose of this project was to estimate the increase in revenues that the average community pharmacy could expect from generic and therapeutic interchange bonuses provided by PAID Prescriptions, Inc.'s Coordinated Care Network. Data from the published literature and conversations with managed care experts and PAID employees were used to develop estimates for bestguess, worst-case, and best-case scenarios. Estimates were based on data from early 1994. It was estimated that the interchange bonuses would increase the average community pharmacy's revenues by an average $105 per year, a $0.55 increase in the dispensing fee. Best-case and worse-case estimates were $227 and $44 for increases in revenues. These were equivalent to $1.19 and $0.23 increases in the dispensing fee. Even with the most optimistic estimates, the total fee paid by the Coordinated Care Network (the sum of the dispensing fee plus interchange bonuses) is much less than the average pharmacy's cost of dispensing a third party prescription.
Vol. NS35, No.7 July 1995
nity pharmacies.! Third party providers' share of the market grew slowly until 1985, when it stood at 28.4%.2 By 1993, for the flfst time, third parties paid for the majority of prescription medications dispensed in community pharmacies. 3 Third party coverage of prescription medications has had a major impact on the profitability of community pharmacies. According to the 1992 Lilly Digest, pharmacies with high percentages of third party prescriptions have lower gross and net profits than do pharmacies with lower percentages. 4 This stands to reason. Third party programs typically reimburse pharmacies for medications at prices considerably lower than those paid by noninsured patients. In addition, pharmacies incur higher costs in dispensing third party prescriptions. 5,6 Thus, prescriptions covered by third party programs are less profitable than are those dispensed to private-pay patients. This situation obviously does not bode well for the continued economic viability of community pharmacy. If third party payments continue to grow, and if third party margins remain low, it is unlikely that community pharmacy can continue to exist as it is currently practiced. Community pharmacy's best strategy for the future may lie in decreasing its reliance on revenues from dispensing, by becoming involved in managing patient outcomes. Both patients and third party payers benefit from pharmacist services that decrease the costs and improve the effectiveness of drug therapy. This strategy will work, however, only if pharmacists are successful in receiving fair and adequate compensation for outcomes-management activities. AMERICA PHARMACY
PAID Prescriptions, Inc., established the Coordinated Care Network in 1993. The Network compensates phannacies for performing a variety of outcomes-management functions. Phase I of the program, which began on January 1,1994, pays pharmacies for controlling drug costs by increasing use of generic and preferred formulary products. Specifically, pharmacies are offered $ 5 for each prescription medication converted from a nonformulary product to a formulary product (the "therapeutic interchange bonus"), a $0.50 addition to the normal dispensing fee for each generic prescription product dispensed ("generic dispensing bonus"), and 20% of the incre-
mental savings for each prescription medication switched from a brand-name product to a generic product ("generic switch bonus"). PAID's willingness to pay pharmacists for nondispensing functions is a major, positive step for community pharmacy, but the question remains, How much will payment for these services, at this level, affect the economic viability of community pharmacy? This project was undertaken to estimate the increase in revenues that the average community pharmacy could expect to realize from the Coordinated Care Network's Phase I bonuses.
Table 1
Analysis of the Effect of Interchange Incentives on Pharmacy Revenue Parameter
Estimate
Sources
Annual prescription volume (1994)
33,290
1992 prescription volume of between 28,000 and 34,500 and 2% growth rates in 1993 and 19944,7,8
PAID percentage of annual prescription volume
3.80/0
Total community pharmacy prescription volume of 1.7 billion9 and PAID's published statement that it handled 65 million prescriptions through its retail network in 1992
Network percentage of PAID prescription volume
150/0
PAID managers' projection that 100/0 to 20% of total volume would come through the Network- in 1994
Maximum rate of generic drug use: generic prescriptions as a percentage of total prescriptions
690/0
IMS data indicating that 31% of prescriptions were written and dispensed with single-source products in 19929
Base rate of generic drug use for 1994, 1995, 1996, 1997
43%,46%, 49%,52%
Hermant Shah estimated generic use rates for 1994 and 1995. 9 ,10 The same rates of increase were assumed for 1996 and 1997.
Year-end generic use rate
48%
The maximum use rate is assumed to be 690/0. This was unlikely to be attained because employee pharmacists (as opposed to pharmacies) lack incentives to dispense generics and because data indicate that substantial numbers of patients purchase brand-name prescription products even when they have to pay substantially more to do SO.11
Average prescription price
$26
Based on an average prescription price of $23 in 1992 and 6% increases in 1993 and 1994.4,7
Average brand-name prescription price
$31.71
Average generic prescription price
$17.44
Based on an average prescription price of $26, a 45% differential between brand-name and generic products,12-14 and the assumption that the average prescription price was based on a mix of 400/0 generic and 600/0 brand-name products
Average savings per generic substitution
$14.27
Difference between average brand-name and generic prescription prices
Percentage of plans offering a generic bonus
50%
A guess. Sensitivity analysis indicates the total bonus is insensitive to this estimate.
Increase in forlnulary compliance
5%
PAID indicates that only 18% of products currently dispensed are for nonformulary products. Thus, the maximum possible increase is 18%.
I
IMS = IMS America; Network = Coordinated Care Network; PAID = PAID Prescriptions, Inc.
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Methods and Materials
macy's gross revenue from bonus payments will increase. The equivalent increase in the fee, on the other hand, should remain constant as volume changes. The fee increase is calculated by dividing the increase in gross revenue attributable to bonus payments by the number of prescriptions dispensed. The information in Figure 1 illustrates how the estimates
Data for the study were taken from the published literature and conversations with managed care experts and PAID employees. Data from the literature consisted primarily of market research data compiled by Walsh America/ PMSI, of Phoenix, Ariz.; MarFinancial Impact of Pharmacy Interchange Incentives ket Measures, of Livingston, N.J.; and IMS America, of PlyCoordinated Care Networlc prescription volume mouth Meeting, Pa., and pub33,290 Average pharmacy's total annual prescription volume lished in American Druggist, x 3.80/0 PAID percentage of total prescription volume Drug Topics, and Pharmacy Times. (For key assumptions 1,273 Total PAID prescription volume and data sources for each estix 150/0 Network percentage of PAID prescription volume mate used in calculations, see 191 Annual PAID Network prescription volume Table 1. For detailed descripGeneric dispensing bonus " " tions of sources of data, procedures, and assumptions, 191 Annual PAID Network prescription volume see box, pages 32-33.) x 45.5% Average percentage of generic prescriptions* Data from these sources 87 Generic prescriptions dispensed were used to estimate the x $0.50 Per-prescription bonus revenue that the average community pharmacy could $43.45 Generic dispensing bonus expect to receive as a result Generic switch bonus of the three performance 480/0 bonuses: generic dispensing, Year-end generic use rate generic switch, and thera430/0 Base generic use rate peutic interchange. Estimates 50/0 Improvement in generic use were made for best-guess, 191 x Annual PAID Network prescription volume worst-case, and best-case sce10 t Increase in generic Network prescriptions dispensed narios. For each scenario, x 500/0 Percentage of plans offering generic switch bonus estimates were made for the 5t fIrst year of the program and Number of prescriptions eligible for bonus for three subsequent years. 14.27 x Average savings per generic switch Estimates were expressed $68.11 Total savings from generic switches as both the gross dollar rev200/0 x Pharmacy percentage of savings enue that the average phanna$13.62 Pharmacy generic switch bonus cy could expect to receive and the average increase in Therapeutic interchange bonus " ' . " ". dispensing fee resulting from 191 Annual PAID Network prescription volume the increased revenue. The 5% x latter estimate was made Improvement in formulary compliance rate 10t because it is more stable. Number of therapeutic interchanges Increases in gross revenue are $5.00 Bonus per interchange directly related to a pharma$47.73 Total therapeutic interchange bonus cy's volume of prescriptions $104.79 Total bonus per year covered by the Coordinated $0.55 Care Network. As the NetEquivalent increase in dispensing fee work grows in prescription * Calculated as average of base and year-end rates. volume, or as a pharmacy t Numbers are rounded up. Calculations are based on unrounded numbers. attracts more of the NetNetwork = Coordinated Care Network; PAID = PAID Prescriptions, Inc. work's beneficiaries, the phar-
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Table 2
rate for generic use for the coming year. 1his rate is their best estimate of what generic use would be in the cOming year without any pharmacy incentives, taking into considImpact eration factors such as drugs Increase in coming off patent and normal, Increase in Generic Equivalent Formulary expected increases in generic Dispensing Rate Increase in Compliance from use over time. At the end of Above Base Line Dispensing Fee Scenario Previous Year (%) ($) (0/0) the year, PAID calculates the year-end generic use rate for Worst case , :" .::' each plan. If the year-end use o 0.23 Year 1 rate for the plan is higher than the base rate, a generic switch 0.23 o o Year 2 bonus will be paid. 0.25 o o Year 3 This procedure is followed fot each plan in the Network. 0.26 o Year 4 o An individual pharmacy is Des.t case ' paid a bonus for a particular plan if (1) the generic use rate 1.19 15 Year 1 10 for the plan exceeded the 1.16 o Year 2 8 base rate and (2) the generic use rate for the pharmacy 1.13 o Year 3 6 stayed the same or exceeded 1.08 Year 4 o 3 the base rate. A pharmacy's bonus, if paid, is proportional to its impact on the plan's 0.55 Year 1 5 5 increased use of generics. The base rate for generic Year 2 0.70 3 3 use is reset every year. Thus, 0.70 Year 3 o o the potential for realizing the bonus decreases with each Year 4 0.66 o o successive year as the actual Best guess ,witl1 minimal imllrove.uents rate approaches the total percentage of orders for which 0.55 Year 1 5 5 generics can be used. 0.52 Year 2 o 2 Because an individual pharmacy cannot determine its 0.50 Year 3 o o own bonus, the estimate of the 0.51 Year 4 o o revenue from this bonus is based on an approximation (Figure 1). The generic switch bonus is optional for individual plan were made. Estimation of the generic dispensing and therasponsors. A number of plan sponsors mandated generic subpeutic interchange bonuses are straightforward; estimation of stitution before the Network was created. Thus, these sponthe generic switch bonus is more complex. sors had no incentive to offer a generic switch bonus after joining the Network. Estimation of Generic Svvitch Bonus PAID's method of calculating the generic switch bonus is Sensitivity Analyses complex. An individual pharmacy cannot estimate its bonus We analyzed the sensitivity of the total dispensing bonus (the from its own performance data. PAID calculates the bonus in the sum of the generic dispensing, generic switch, and therapeutic following way. At the beginning of each year, PAID representainterchange bonuses) to estimates of each of the following: the tives meet with each plan sponsor, and they jointly set a base
Impact of Generic and Therapeutic Interchange Incentives on ComRlunity Pharmacy for Years 1-4 of Progranl Operation
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phannacy's annual increase in use of generic and formulary products, the average savings realized when switching from a brand-name product to a generic, and the percentage of plan sponsors offering the generic switch bonus.
Table 3
Best- and Worst-Case Analyses of Financial Impact of Interchange Incentives Incentive
Impact ($)
Worst case: Assumes a 1 % increase in number of generic products dispensed, average savings of $12 per generic switch, and no increase in dispensing of formulary products.
$2.29
Generic switch bonus
$41.53 Generic dispensing bonus Bonuses for 0.00 Therapeutic interchange bonus Subsequent Years $43.82 Total bonus $0.23 Equivalent increase in dispensing fee Several scenarios were examined to determine the Best case: Assunles a 10 increase in number of generic products dispensed, average savings of $20 per generic switch, and 15% increase in likely amount of the total perdispensing of formulary products. formance incentive in the $38.19 Generic switch bonus second and subsequent years $45.82 Generic dispensing bonus $143.20 Therapeutic interchange bonus of the Network program. The $227.21 Total bonus assumptions made about $1.19 Equivalent increase in dispensing fee increases in generic and therapeutic interchange are shown in Table 2. Estimates were made for the worst-case, best-case, and best-guess scenarios. The methods of estimaTable 4 tion were the same as those shown in Figure 1. %
Effects of Changes in Selected Variables on Bonus from Generic and Therapeutic Interchange
Results Variable
An average pharmacy could expect an additional $105 in rev-
enue from performance bonuses offered by the Network during the fu-st year of program operation. Of this amount, $43 would come from the generic dispensing bonus, $14 from the generic switch bonus, and $48 from the therapeutic interchange bonus. In the worst case, a pharmacy that did little to achieve the performance bonuses might gain up to $44 (Table 3). The increase would come primarily from the generic dispensing bonus. In the best case, a pharmacy with very high levels of performance would increase annual revenue by $227. As suggested earlier, pharmacies that dispensed higher volumes of Network prescriptions would see proportionately higher revenues from performance bonuses. To state these figures another way, the average pharmacy would add $0.55 to its dispensing fee as a result of the performance bonuses. The comparable worst-case and best-case figures are $0.23 and $1.19 per prescription dispensed, respectively. Estimated bonus amounts for subsequent years of the program differed only minimally from first-year estimates. These estimates are shown in Table 2. The sensitivity analyses indicated that a pharmacy's total bonus is not particularly sensitive to either the average savings per generic substitution or the percentage of plans offering the generic switch bonus (fable 4). The lack of sensitivity occurs
Increase in Gross Revenues ($)
Increase in generic products dispensed 1% 5% 10% 15%
Equivalent Increase in Dispensing Fee ($)
104.79 118.41 132.03
$0.49 0.55 0.62 0.69
Average savings per generic sl/Vitch $ 10.00 12.00 15.00 20.00 25.00
100.71 102.62 105.48 110.26 115.03
0.53 0.54 0.55 0.58 0.60
Plans offering generic sl/Vitch bonus 25% 50% 75% 90%
97.98 104.79 111.60 115.69
0.51 0.54 0.58 0.61
Increase in formulary products dispensed 0% 5% 10% 15% 20%
57.06 104.79 152.51 200.25 247.99
0.30 0.55 0.80 1.05 1.30
$ 93.89
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because these variables affect only the generic switch bonus. Under most reasonable assumptions, this bonus is small, relative to the generic dispensing and therapeutic interchange bonuses. The total bonus is more sensitive to the rate of increase in generic drug use. The greater sensitivity occurs because the rate of improvement affects both the generic switch bonus and the generic dispensing bonus. The total bonus is very sensitive to changes in the rate of improvement in formulary compliance. A difference in this rate of 5 percentage points is equivalent to a $0.25 increase in the dispensing fee. Thus, the most critical variable of those analyzed is the rate of improvement in formulary compliance.
Conclusions and Discussion The results indicate that the average community pharmacy could increase its dispensing fee by $0.23 to $1.19 as a result of the Coordinated Care Network's bonus payments for generic and therapeutic substitution. To put these numbers in perspective, they can be compared with the dispensing fee the Network offers pharmacies. The Network has two levels. In Level I, the reimbursement rate is higher, but pharmacies do not serve all Network plans. The Level II fee is the lower reimbursement rate that pharmacies must accept for the opportunity to serve all plans
Sources of Data and Estimates Prescription Volume Esthnates
Average prescription volume: Estimates published in American Druggist, 7 Lilly Digest, 4 and Drug TopicS> put the average pharmacy's prescription volume in 1992 at between 28,000 and 34,500. Growth in prescription volume in the recent past has ranged from -0.2% to 4% a year. 4,7 The 1994 estimate is based on a 1992 volume of 32,000 prescriptions and 2% growth rates for 1993 and 1994. These figures yield an estimated prescription volume in 1994 of 33,290. PAID percentage: In a mailing to community pharmacies announcing the Coordinated Care N etwork, PAID Prescriptions, Inc., stated that it handled 65 million prescriptions through its retail network in 1992. Published estimates put total prescription volume handled by community pharmacies at 1.7 billion for 1992.9 Thus, PAID handled about 3.8% of the average community pharmacy's prescription volume in 1992. Without more current information, or information about changes ~n PAID's share of the market, the 3.8% estimate is the best available. Annual PAID volume was calculated as 3.8% of the 33,290 total prescriptions dispensed by the average pharmacy in 1994. Annual PAID Coordinated Care Network volume: Discussions with PAID managers indicated that between 10% and 20% of PAID's prescription volume would come through the Network in 1994. Thus, the annual number of Network prescription orders processed by the average community pharmacy was calculated as 15% of the annual PAID volume of 1,273 prescriptions. Calculation of Generic Bonuses
Maximum generic use: IMS data9 for 1992 provided the following breakdown of new prescription volume:
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• 31 % written and dispensed with single-source . products. • 16% written and dispensed with generic products. • 53% written for brand-name multisource products. These data indicate that the maximum rate of generic use, calculated as generic prescriptions dispensed divided by total prescriptions dispensed, would be 69%. Base generic use rate: Published estimates indicate generic use rates of 33% to 37% in 1992 for the total retail market. 9,10 Hennant Shah, a generic-industry analyst, estimates the generic rates of use for the retail market to be 40% in 1993,43% in 1994, and 46% in 1995. 9 Using these estimates, base generic use rates of 43%, 46%, 49%, and 52% for 1994,1995, 1996, and 1997, respectively, were calculated. Year-end generic use rate: The maximum possible year-end generic use rate would be 69%. This would represent a 26% increase over the base generic use rate. For a number of reasons, few pharmacies are likely to approach this maximum. First, pharmacies have probably already accomplished all the easy or simple generic conversions. Those remaining will require greater effort. Second, a large number of pharmacies in the Network will be chain pharmacies whose pharmacists have less incentive than do independent pharmacists to initiate generic conversions. They face the inconvenience of gaining the approval of both the physician and patient but, in most cases, receive no financial reward for doing so. Also limiting maximum use of generics is some patients' refusal to accept generic medications. Phillips and Jacobs 11 have reported that in 30% of cases, consumers in the Oklahoma state employee insurance plan
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enrolled in the Network. Currently, the Level II dispensing fee paid by the Network is the average wholesale price (AWP) less 12% plus $2.25. If we assume that AWP minus 12% is close to a pharmacy's actual acquisition cost, then the $2.25 dispensing fee represents the amount pharmacies have available to cover expenses and generate a profit. Adding the bonus payments would increase total reimbursement (the fee plus the bonus) from $2.25 to between $2.48 and $3.47. The latter figure is a healthy increase. However, most estimates put the cost of dispensing a third party prescription medication at between $6 and $ 7. 5,6 Thus, even with the most optimistic estimates, total reimbursement (the fee plus the
purchased brand-name products rather than less expensive generics even though they had to pay the price difference out of pocket. This occurred in more than 19% of instances where the price difference exceeded $20. On the basis of these considerations, a year-end rate of 48% and an improvement rate of 5% have been assumed. Average prescription price: The average prescription price in independent pharmacies was reported to be $22.44 in 1991, according to the 1992 Lilly Digest. 4 Increases in the average price were around 10.5% for 1989 to 1991.4 American Druggist reported average prescription prices of around $23 for 1992; this figure shows an increase of 4.2% for independents and 7.2% for chains over 1991 prices. 7 Assuming an average price of $23 in 1992 and increases of 6% in 1993 and 1994, the 1994 average price would be about $26. Average Generic and Brand Prices
A number of studies conducted in the late 1980s estimated the savings gained by switching from a brandname product to the comparable generic. 12-I4 The savings ranged from 37% to 50%, with most estimates being around 40%. Steven Schondelmeyer, director of the University of Minnesota's PRIME Institute, reported that Medicaid data from the fourth quarter of 1992 indicate a 60% savings. 15 On the basis of these estimates, we used 45% as the savings a payer would realize when a generic substitution occurred. For 1993, about 40% of prescription medications dispensed were generic products and 60% were brand-name products. -From these figures, and the estimated 45% generic savings per prescription, the
bonus) is inadequate to cover pharmacy costs. Increases in the number of prescriptions dispensed for Network beneficiaries would expand pharmacies' revenues but would not affect the unfavorable discrepancy between total reimbursement per prescription and the cost of dispensing. Furthermore, these estimates reflect increases in revenue, not changes in net profit. To generate increased revenues from the bonuses, many pharmacies may have to increase labor costs. Pharmacists must take the time to speak with patients and physicians before making generic and therapeutic interchanges. Extra staff, and thus additional expense, may be needed to provide pharmacists in high-volume outlets with the time required for these extra communications.
average brand and generic prices can be estimated as follows: Where A = average, Rx = prescription price, B = brandname price, G =generic price, and GS =generic savings per prescription, ARx = 0.6(AB) + O.4(AG), AG = AB(1.0 - 0.45), ARx = 0.6(AB) + 0.4(0.55 AB), ARx = 0.82 AB, AB = ARx/0.82, AB = $26/0.82 = $31.71, AG =AB(1.0 - 0.45), AG = $31.71 x 0.55 = $17.44. AGSJRx = AB - AG. AGSJRx = $31.71 - $17.44 = $14.27. Percentage of Plans Offering Generic Bonus
A number of Network plans mandate generic substitution, so they have no incentive to offer a bonus program. The figure of 50% used in the analysis is simply a guess. The sensitivity analysis shows that the total bonus is fairly insensitive to this estimate. Improvenlent in Formulary Compliance
PAID says that only 18% of products currently dispensed are nonformulary products. This fact limits the increase in compliance that a pharmacy can achieve. Few pharmacies will attain compliance rates approaching 100%, for a number of reasons, including those limiting the rate of generic substitution. Also, therapeutic conversions are likely to take more time and effort to accomplish than are generic switches. On the basis of these considerations, an increase in formulary use of 5% has been assumed.
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Thus, the evidence from this study indicates that payments offered by PAID may not be a sufficient incentive for pharmacies to participate. However, PAID could probably afford to provide higher incentive payments. Incentives for dispensing generic products now include a dispensing bonus of $0.50 per generic medication dispensed and a generic switch bonus of 20% of the savings realized on generic interchanges. PAID's way of administering the switch bonus, however, makes it unlikely that pharmacists receive anywhere near 20% of the savings. PAID and the plan sponsors factor in a generic improvement rate for each year. Only increases in generic interchanges above this rate are subject to the bonus. In addition, the pharmacy receives the switch bonus only if the plan's rate of generic use exceeds the anticipated improvement rate. Thus, a pharmacy could dramatically improve its generic interchange rate and yet not receive a bonus because the plan's rate did not improve sufficiently. Finally, not all plans within the Network offer the switch bonus. As a result of these factors, pharmacies actually receive much less than 20% of the estimated $14.27 in average savings generated by each generic interchange. In examining this issue, the more important question is, Why do pharmacies receive, at best, only 20% of savings which they generate through generic interchange? A higher percentage incentive would increase pharmacies' revenues and could increase plan sponsors' savings by generating higher levels of generic interchange. The analysis reported here was conducted during early 1994. Since that time, some of the estimated parameters as well as the Network's payments for generic and therapeutic substitution may have changed. However, it is unlikely that such change has had a substantial effect on the overall results and conclusions of this study. The bonuses estimated in this study were only the first efforts by PAID and other pharmacy benefits management companies to involve pharmacists in patient outcomes management. Phase II of the Coordinated Care Network offers to pay pharmacists for functions more related to patient care
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and less related to dispensing, such as counseling elderly patients and those with asthma. Further research is needed to project the effects of these and similar incentives on the eco· nomic viability of community pharmacy. Norman V. Carroll, PhD, is professor ofPharma(), administration, School ofPharmacy, Virginia Commonwealth University, Medical College of Virginia, Richmond. This research was supported by the American Pharmaceutical Association.
References 1. Third parties pay for lout of every 4 Rxs. Am Drug. August 1975; 172:56. 2. Slowdown continues in Rx dept gains; number dispensed increases by less than 1%. Am Drug. May 1986;193:80-4. 3. Senter DR. Prescription trends survey. Am Drug. June 1994;201 :23-6.
4.
Lilly Digest 1992: Survey of 1991 Operational Data. 60th ed. Indianapolis: Eli Lilly and Company; 1992:1-38.
5. Carroll NV. Cost of dispensing private-pay and third-party prescriptions in independent pharmacies. J Res Pharm Econ. 1991 ;3:3-16. 6. Schafermeyer KW, Thomas JI, Schondelmeyer SW. An Assessment of Chain Pharmacies' Costs of Dispensing a Third Party PrescriptionFinal Report. Lafayette, Ind: Pharmaceutical Economics Research Center; 1990. 7. Senter DR, Schondelmeyer SN. Prescription trends survey. Am Drug. 1993;208(1):31-4. 8.
Ukens C. Home health care, mail order lead pharmacy gainers. Drug Topics. 1993;137(17):15-6.
9. Glaser M. On the move again. Drug Topics Special Supplement: Generics-The View Ahead. 1993;137:6s-12s. 10. Salma R. Market forces usher in a 'golden age' of generic drugs. Pharm Times. 1994;160(1):48--50. 11. Phillips CR, Jacobs EW. Patients pay for brand names. Pharmaceutical Executive. 1994;14(2):56-64. 12. Bloom BS, Wierz DJ, Pauly MV. Cost and price of comparable branded and generic pharmaceuticals. JAMA. 1986;256:2523-30. 13. Dyckman Z. Generic and Brand Name Drug Prices-An Updated Look at the Evidence. Columbia, Md: Center for Health Policy Studies; 1987:1-19. 14. Dyckman Z. A Review of 'Cost and Price of Comparable Branded and Generic Pharmaceuticals'-Are Public Policies Which Promote Use of Generic Drugs Cost Effective? Columbia, Md: Center for Health Policy Studies; 1987:1-15. 15. Schondelmeyer SW. Personal communication, February 1994.
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