OBJECTIVES: 1) To examine whether small individual provider attributes affects reimbursement between insurer and independent retail pharmacies, and 2) to understand the implication of our results on the potential impact of the proposed community pharmacy collective bargaining law. METHODS: Data were collected and compiled from four sources: a national mail survey to independent pharmacies, National Council for Prescription Drug Programs Pharmacy database, 2000 U.S. Census and 2006 Economic Census data. Pharmacy bargaining power was calculated using the costs, cash prices and reimbursement rates of a brand name drug Lipitol and a generic drug Lisinopril acquired from the survey. Key independent variables include individual pharmacy attributes and local market structure measures. RESULTS: Reimbursements varied substantially across pharmacies. For Lipitor, best reputation (β=0.101), easiest accessibility (β=0.067), pharmacy ownership concentration index (β=0.104) and area per capita income (β=-0.165) are significant predictors of pharmacy bargaining power. For Lisinopril, only easiest access (β=0.082) and per capita income  (β=-0.068) are found to be significant. CONCLUSIONS: Pharmacies with the best reputation, easiest access and facing less competition in its market receive higher reimbursement rates for brand name drugs. An independent pharmacy with the best reputation and easiest access and with average dispensing volume would receive $167,688 more in reimbursement a year than a pharmacy that doesn't have the best reputation and easiest access. Our results suggest that the current third party contracting practice rewards pharmacies with favorable attributes with higher reimbursements. Our results also imply that a collective bargaining law for independent pharmacies is likely to benefit those pharmacies currently receiving below average reimbursement rates due to weaker market positions, and would have the potential effect of raising costs and removing incentives for pharmacies to maintain the attributes that are valuable to customers.