A Comparison of Costs of Medicare Part D Prescriptions Dispensed at Retail and Mail Order Pharmacies

BACKGROUND: Plan sponsors encourage the use of mail order pharmacies because they believe mail order dispensing will lower their prescription drug costs. Health plans and pharmacy benefit management companies (PBMs) usually offer patients substantially lower copayments to incentivize them to use mail order pharmacies. A number of health plans and PBMs now require patients to use these pharmacies for maintenance prescriptions. OBJECTIVES: To (a) compare costs for prescriptions dispensed through mail order and retail pharmacies in Medicare Part D plans and (b) examine whether mail order or retail pharmacies provided lower all third-party costs for each of the top 300 products; the relationship between whether a product was available generically and whether mail order or retail pharmacies provided lower prices; and the generic substitution rates at mail order and retail pharmacies. METHODS: The sample for this study consisted of 2010 Medicare Part D prescription drug data for the 300 products with the highest sales at mail order pharmacies. The prescriptions included in the study were dispensed in the initial coverage limit phase of Part D by retail or mail order pharmacies to patients who were insured by Part D for 12 months in 2010, who received no Part D subsidies, and who were alive for the full year in 2010. Mean-per-unit costs were calculated for both mail order and retail prescriptions for each of the top 300 products. Products were defined by Medi-Span Generic Product Indentifier. Summary statistics for the overall costs of mail order and retail prescriptions were calculated as the weighted mean-per-unit costs of the top 300 products. The weighting factor for both mail order and retail prescriptions included both the mail order quantity dispensed per prescription and the number of prescriptions dispensed. Weighting both mail and retail prescriptions by mail order quantities dispensed and numbers of prescriptions ensured that the results reflected actual cost differences rather than differences in the mix or quantities of prescriptions dispensed. These calculations were made for total costs, costs covered by the Medicare Standard Benefit (MSB), costs paid by all third-party payers (including Medicare), and patient costs. RESULTS: The top 300 products accounted for 84.8% of mail order costs. Among all prescriptions in the sample—both mail order and retail—mail order prescriptions accounted for 7.8% of prescriptions dispensed and 14.1% of total spending. Comparison of 90-day or greater supplies indicated that costs per unit of medication for retail pharmacies were lower for total costs ($0.94 for retail pharmacies vs. $0.96 for mail order pharmacies), MSB costs ($0.59 for retail pharmacies vs. $0.63 for mail order pharmacies), and all third-party payer costs ($0.64 for retail pharmacies vs. $0.72 for mail order pharmacies), but higher for patient costs ($0.31 for retail pharmacies vs. $0.24 for mail order pharmacies). Retail pharmacies had lower all third-party payer costs for 244 products, while mail pharmacies had lower costs for 56 products. Retail pharmacies were more likely to have R ESEAR C H