IMS data used in this chapter are drawn from the IMS Health Retail Method-of-Payment Report ™ and Price Trak Report™. IMS collects data from a panel of 34,000 retail pharmacies, including independents, chains, and pharmacies within food stores or mass merchandisers. The IMS sample for these products accounts for over 60 percent of retail outlets and over 70 percent of prescriptions filled in the US, but it omits mail-order pharmacies and pharmacies within facilities, such as outpatient hospital pharmacies, VA pharmacies, and those operated by the few HMOs that have their own pharmacies. Through a variety of electronic media, IMS collects acquisition cost, retail price, and payment source for every new and refilled prescription. Three payment sources are identified: cash, Medicaid, and other third party (essentially private insurance). Note that the IMS data would class an individual who paid cash and was later reimbursed by an indemnity policy in the cash category.26
For this study, 1996 and 1999 price data were obtained for 39 Uniform System of Classification (USC) categories of drugs that together included the 100 most commonly prescribed individual drugs in 1996.27 These categories also included 177 of the 200 most commonly prescribed drugs in 1998. These drugs represent a substantial portion of the total market for pharmaceuticals: the 200 most commonly prescribed drugs in 1998 made up 57 percent of the total prescriptions filled at retail pharmacies, and also 57 percent of the total dollar volume of prescriptions in 1998.28 Not all of these drugs were on the market in 1996; price data for that year were obtained for 166 drugs. Nineteen of the 20 drugs most frequently received by Medicare beneficiaries in 1996 are also included.29 We chose to use the most commonly prescribed drugs instead of those drugs with the highest dollar volume. This decision allowed us to focus our analysis on the drugs most used by consumers instead of the highest-cost drugs.
IMS provides data on price for each specific drug name, form (e.g., tablet or capsule), and strength (e.g., 500 milligrams) from each manufacturer. This study uses the most common form and strength in 1999 for each drug name and manufacturer, which is generally representative of the aggregate results across all forms and strength for a given drug.30
The next section presents results from both of these data sources that explore the question of whether individuals without prescription drug insurance coverage and individuals paying cash for prescription drugs pay more for the same drugs than insurers buying drugs on behalf of covered individuals. In general, we use the IMS Health data to compare directly the prices paid on a drug-by-drug basis, which cannot be done with the MEPS data. We use the MEPS data to compare prices paid by Medicare enrollees with and without coverage, and to aggregate across all drugs, neither of which can be done easily with the IMS data.
Unless otherwise noted, all results reported based on MEPS data are statistically significant (at the 0.05 level, based on a two-tailed test). The unique nature of the way IMS collects and reports its data does not allow for statistical testing of results from these audits. However, given the large sample sizes used by IMS (over 70 percent of US prescriptions filled at retail pharmacies), all results reported based on IMS data are highly likely to be statistically significant. See the Introduction of this report for details.
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