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Variation in drug prices at pharmacies: are prices higher in poorer areas?

Article Excerpt
Prescription drug prices are a significant barrier to appropriate medication use. Cost-related underuse in the uninsured is common, and even small increases in drug prices can dramatically affect medication adherence among the poor (Steinman, Sands, and Covinsky 2001; Safran et al. 2005; Goldman, Joyce, and Zheng 2007). There are clear adverse health effects associated with decreased medication adherence, including poorer control of chronic diseases and higher rates of hospitalization and emergency room visits (Tamblyn et al. 2001; Heisler et al. 2004; Hsu et al. 2006).

If drug prices were higher for the poor, then disparities in medical care could be exacerbated. Small studies in New York City have suggested that pharmacy prices in lower-income areas may be higher than prices in wealthier areas (The Council of The City of New York 2004; Cave 2006). Beyond pharmaceuticals, prior studies of price variation in the United States have found that for a variety of goods and services, poorer individuals often face higher prices than those who are wealthier. Lower-income families often pay higher insurance premiums and face higher interest rates for mortgages and other loans (Fellowes 2006). Grocery stores in poorer neighborhoods tend to be smaller and more expensive than in wealthier neighborhoods, and this effect may be mediated by the relative preponderance of independent grocers--rather than chain supermarkets--in poorer neighborhoods (Goodman 1968; Kaufman et al. 1997; Chung and Myers 1999; Fellowes 2006).

While many low-income individuals obtain prescription coverage through government programs and may receive relatively generous drug benefits, those who have no prescription coverage are required to pay the full retail price charged at their pharmacies. More than half of uninsured adults younger than 65 come from low-income families (Kaiser Family Foundation 2006). Because of discounts negotiated by insurance companies, cash-paying customers are charged higher prices for their drugs than their insured counterparts (Frank 2001; Anderson 2007; Congressional Budget Office 2007). The question remains, however, whether low-income patients who are uninsured face higher retail prices than wealthier uninsured individuals. Higher drug prices could impose additional barriers to access to prescription drugs for the poor who are uninsured.

We sought to explore whether uninsured customers in poor areas face higher average retail prices for their prescription medications than those in wealthier areas, analogous to the situation for other products and services. We used a publicly available database of prescription drug prices in Florida pharmacies to examine the association between retail pharmacy drug prices and median ZIP code income.

METHODS

Data

We conducted a cross-sectional analysis of prescription prices in November 2006 from Florida's publicly available directory of drug prices charged by pharmacies: the MyFloridarx.com website. The website, which was created by the state legislature in 2005, is maintained by Florida's Agency for Health Care Administration in order to enable consumers to comparison shop for medications (Florida Office of the Attorney General 2005). The website lists retail prices (the price uninsured patients would be required to pay) for the 100 most commonly used drugs in Florida as well as pharmacy names and addresses. Pharmacies that have dispensed 1 of these top 100 drugs to a patient insured by Medicaid in a given reporting period are required by law to report the retail price for that drug for publication on the website. Data from a 2005 survey by the National Association of Chain Drug Stores found 3,601 community pharmacies in the state of Florida (M. Jackson, R.Ph., Florida Pharmacists Association June 18, 2007, personal communication). In total, 3,598 pharmacies were included in the website in November 2006, representing approximately 99 percent of the pharmacies in the state. The ZIP code-level data on median income and population size were obtained from the...

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