How might the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 affect the financial viability of rural pharmacies? An analysis of preimplementation prescription volume and payment sources in rural and urban areas

Abstract

Context: Passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) has created interest in how the legislation will affect access to prescription drugs among rural beneficiaries. Policy attention has focused to a much lesser degree on the implications of the MMA for the financial viability of rural pharmacies. Purpose: This article presents descriptive information on mail-order prescriptions, volume, and payer type of retail prescriptions in rural vs urban areas. Together, these data provide a baseline for evaluating how implementation of the MMA may affect the financial viability of rural independent pharmacies. Methods: Projections of prescriptions dispensed from retail and mail-order pharmacies in 2002 for the total US and a sample of 17 states were obtained from IMS Health. Findings: The volume of mail-order prescriptions is small. Rural providers prescribed fewer retail and mail-order prescriptions per person, but more units per person. Rural areas have a higher percentage of prescriptions paid for by cash (18% vs 13%) and Medicaid (16% vs 10%) and a lower percentage of third-party payers than urban areas. Significant variation in volume and payer type exists between states. Conclusions: Rural, independent pharmacies may be negatively affected by MMA implementation as business shifts from cash to third-party reimbursement. The high degree of variation between states also has potentially important implications for the implementation of Prescription Drug Plan regions under MMA.