Third party bargaining and contract terms: a link over time?

Objective: To evaluate whether prior pharmacy bargaining process strategies and pharmacy dependence on third parties affect the bargaining power of pharmacies in price negotiations with third parties.

Design: One-time survey.

Setting: Random sample of 900 independent and small chain pharmacies in nine states: Colorado, Connecticut, Georgia, Kentucky, Minnesota, Oklahoma, Oregon, Pennsylvania, and Wisconsin.

Participants: Two hundred sixteen of the returned surveys contained sufficient responses for this analysis.

Interventions: Survey data on pharmacy bargaining power and prior pharmacy bargaining strategies, pharmacy dependence, and market characteristics were analyzed using multiple regression in a previously developed and modified provider/third party bargaining model.

Main Outcome Measure: Pharmacy bargaining power.

Results: Pharmacy bargaining power varied across our sample. Pharmacy bargaining power was positively related to whether a pharmacy previously bargained with the third parties, negatively related to prior requests for contract changes, and negatively related to the pharmacy's dependence on third parties in total.

Conclusion: Pharmacy bargaining power is related to the bargaining strategies employed by pharmacies during the previous year and the dependence of pharmacies on third party payers in total. With the prevalence of "take-it-or-leave-it" contracts from third parties, prior pharmacy bargaining behavior may affect the initial terms of the contracts that pharmacies are offered.