MARCH 01, 2006

Laws designed to protect Maryland pharmacists from unfair mail-order competition are driving up prescription costs to the state's consumers by $7 million to $16 million a year, according to a new report issued by the Maryland Health Care Commission (MHCC). The analysis found that Maryland consumers and third-party plan sponsors spend more than $4.1 billion annually on prescription drugs, but only $600 million of that amount—14% of the total—goes for mail-order prescriptions.

That figure is well below the 18% average market share commanded by mail-order pharmacies nationally. It places Maryland dead last in terms of mail Rx purchases. The reason, according to the report, is state laws prohibiting third-party payers from offering lower copays to patients who order drugs by mail rather than at retail pharmacies.

Allowing health insurers to provide incentives to Marylanders who switch to mail-order dispensaries could effectively reduce consumer spending for prescription drugs by anywhere from 2% to 6%. Significantly, however, MHCC researchers noted that those savings would be dwarfed by the resulting losses to Maryland retail pharmacies.

Eliminating the current restrictions on lower copays for mail-order drugs would produce losses to the state's retail pharmacies of between $88 million and $210 million, the researchers estimated. MHCC officials, however, downplayed the impact on community pharmacies in the state by predicting that much of the loss would be mitigated by increases in the total statewide market for prescription drugs over the next few years.