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Related Experiment Videos

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

John M Brooks1, William R Doucette, Bernard A Sorofman

  • 1College of Pharmacy, University of Iowa, Iowa City 52242, USA. john-brooks@uiowa.edu

Journal of the American Pharmaceutical Association (Washington, D.C. : 1996)
|May 28, 2002
PubMed
Summary

Pharmacy bargaining power is influenced by past negotiation strategies and reliance on third-party payers. Previous bargaining experience and lower dependence enhance a pharmacy's negotiation strength.

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Area of Science:

  • Health Services Research
  • Health Economics
  • Pharmacy Management

Background:

  • Third-party payers significantly influence pharmacy revenue through contract negotiations.
  • Understanding factors affecting pharmacy bargaining power is crucial for financial sustainability.

Purpose of the Study:

  • To investigate how prior pharmacy bargaining strategies and dependence on third parties impact pharmacy bargaining power in price negotiations.
  • To analyze the relationship between historical negotiation tactics and current leverage with third-party payers.

Main Methods:

  • A one-time survey was conducted with a random sample of 900 independent and small chain pharmacies across nine U.S. states.
  • Data from 216 usable surveys were analyzed using multiple regression, applying a modified provider/third-party bargaining model.

Related Experiment Videos

  • Key variables included pharmacy bargaining power, prior bargaining strategies, and dependence on third parties.

    • Main Results:

    • Pharmacy bargaining power demonstrated variability within the surveyed sample.
    • A positive correlation was found between prior bargaining experience and pharmacy bargaining power.
    • Conversely, a negative relationship existed between prior requests for contract changes and bargaining power, as well as total dependence on third parties.

    Conclusions:

    • Pharmacy bargaining power is significantly associated with a pharmacy's past bargaining strategies and its overall dependence on third-party payers.
    • Given the commonality of non-negotiable contracts, a pharmacy's prior bargaining behavior may influence the initial terms offered by third parties.