Report to the President: Prescription Drug Coverage, Spending, Utilization, and Prices.. Cash Share of the Market

04/01/2000

Cash payments have accounted for a declining share of the retail market for prescription drugs, as noted in Chapter 3. The share of prescriptions for which the purchaser pays in cash at the time of the transaction has declined from 63 percent in 1990 to 25 percent in 1998.4 One possible explanation for some of the differences just observed could be state and regional variation in the shares of the market attributed to cash payment (which here includes those with indemnity coverage where payment is not made at the point of sale).

Table C-3 also shows cash shares by state for 1998 from IMS data published by the National Association of Chain Drug Stores.5 States in the Northeast have relatively lower shares of cash payments – including two of the three lowest cash-share states: Rhode Island (13.4%) and New York (14.8%). Among the other three regions, the share of cash transactions averages about 26 percent. There is a great deal of variation across states in these regions, however. For example, the two states with the highest share of cash payments–North Dakota (44%) and South Dakota (42%)–are both in the Midwest as is Michigan (14.3%), the state with the second lowest cash share. It is likely that differences in cash share are related to differences in levels of insurance coverage and penetration of PBMs and other types of managed pharmacy benefits.

Table C-3: State and Regional Price Differences
State and Region Median Price Difference Distribution of Price Differences Cash Share
<0 0-9.9 10-19.9 >=20
National 7.4% 6 12 4 3  
Northeast 11.4% 2 7 13 3  
Connecticut 14.6% 2 7 11 5 21.2%
Maine 8.2% 0 16 3 6 21.0%
Massachusetts 12.8% 8 4 5 8 15.1%
New Hampshire 10.6% 1 9 8 7 21.8%
New Jersey 9.6% 2 13 7 3 16.6%
New York 17.7% 0 1 14 10 14.8%
Pennsylvania 7.6% 4 14 3 4 14.6%
Rhode Island 8.8% 2 11 8 4 13.4%
Vermont 10.7% 1 9 9 6 23.6%
Midwest 4.5% 6 13 3 3  
Illinois 4.1% 8 10 4 3 24.6%
Indiana 5.4% 6 13 3 3 25.2%
Iowa 2.5% 5 15 1 4 31.8%
Kansas 4.3% 4 14 2 5 34.7%
Michigan 11.2% 1 9 10 5 14.3%
Minnesota 6.1% 4 14 4 3 20.1%
Missouri 3.0% 6 13 3 3 23.4%
Nebraska -0.9% 15 6 2 2 28.1%
North Dakota 6.1% 1 17 2 5 43.8%
Ohio 5.8% 5 14 4 2 18.8%
South Dakota 5.0% 2 16 3 4 41.5%
Wisconsin 0.3% 12 9 2 2 22.0%
South 5.1% 5 13 4 3  
Alabama 5.9% 2 16 2 5 26.0%
Arkansas 5.3% 3 16 2 4 34.2%
District of Columbia 21.6% 0 1 10 14 20.0%
Delaware 11.1% 0 9 10 6 18.7%
Florida 1.3% 11 10 3 1 24.3%
Georgia 8.5% 0 14 5 6 26.1%
Kentucky 4.9% 5 14 3 3 22.3%
Louisiana 4.3% 4 16 3 2 25.0%
Maryland 10.8% 1 10 9 5 15.9%
Mississippi 6.2% 1 18 2 4 27.6%
North Carolina 9.9% 0 13 9 3 28.5%
Oklahoma 4.4% 3 16 2 4 28.7%
South Carolina 8.3% 0 15 5 5 26.1%
Tennessee 5.5% 5 14 3 3 23.9%
Texas 3.8% 6 14 3 2 23.8%
Virginia 7.9% 4 14 4 3 19.9%
West Virginia 4.8% 7 12 3 3 19.1%
West 11.4% 2 9 9 5  
Alaska 7.5% 0 16 6 3 30.2%
Arizona 9.9% 5 8 4 8 23.0%
California 15.6% 2 4 10 9 20.2%
Colorado 7.9% 5 9 6 5 22.4%
Hawaii 11.3% 2 9 10 4 18.6%
Idaho 6.6% 2 16 3 4 28.3%
Montana 5.8% 2 15 6 2 40.0%
Nevada 10.7% 2 9 9 5 21.6%
New Mexico 0.7% 12 8 3 2 23.2%
Oregon 8.2% 2 14 3 6 24.4%
Utah 10.6% 1 11 6 7 21.3%
Washington 5.5% 4 14 5 2 24.5%
Wyoming 6.0% 4 14 2 5 38.3%

Note: Data exclude the effect of rebates for those with drug coverage.

Source: IMS Health,1998

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