The extent to which negotiated rebates and discounts with drug manufacturers and pharmacies have controlled costs can be substantial. The success of insurers and other institutional buyers in using their consolidated buying power to reduce the price they pay for drugs has not been shared by retail pharmacists. As health insurers and the PBMs that represent them cover more people, they use the size of their member populations as leverage to help reduce the amounts that they reimburse pharmacies for prescriptions dispensed to those populations. All these pressures on retail pharmacies have had a considerable effect. Responses of Retail Pharmacists

Retail pharmacists have resorted to three different types of action in response to the changes in pharmaceutical pricing: litigation, adoption of competitive strategies, and calls for legislation. Prescription Drugs: Changes in Prices for Selected Drugs (GAO/HRD-92-128, Aug. 24, 1992).
Why GAO Did This Study

GAO discussed the implications of prescription drug pricing for retail pharmacies, focusing on the: (1) changes in the process of getting prescription drugs from manufacturers to patients; and (2) consequences for and response of retail pharmacies to these changes.

What GAO Found

GAO noted that: (1) health insurers have used their consolidated buying power to obtain drug discounts not available to retail pharmacies; (2) health insurers and pharmacy benefit managers (PBM) use the size of their member populations as leverage to help reduce the amounts that they reimburse pharmacies for prescriptions dispensed to those populations; (3) retail pharmacies have been facing increased competition from mail order pharmacies; and (4) retail pharmacies have responded to the changes in pharmaceutical pricing by waging lawsuits against leading drug manufacturers and wholesalers, developing more competitive strategies for gaining business, and campaigning for legislative action.