OBJECTIVES: To determine the out-of-pocket prices of outpatient prescription drugs using methods that account for the multimodality of their distributions. METHODS: Using data from the 1992-2002 Medicare Current Beneficiary Survey and the 1996-2003 Medical Expenditure Panel Survey, we demonstrate the multimodality of prices for 175 of the most commonly prescribed medications in the United States. Through the application of Gaussian and gamma mixture models, we estimate the cash price and covered price paid by consumer for each of these medications, and estimate the percentage of consumers paying each price. RESULTS: The results suggest that simple averages of out-of-pocket prices are not applicable for economic evaluations and policy studies in pharmaceutical economics, except in the case of multisource medications. Without the integration of price disparities, analyses of single source medications may lead to erroneous policy conclusion. CONCLUSION: Price disparities may have been the motivation for recent coverage expansion endevours, such as Medicare Part D. Our results demonstrate the prevalence and extent of these price disparities, which appear particularly grave in the price distributions of branded medications.