OBJECTIVES: The objective of this study was to compare drug utilization and drug net reimbursement for a retiree patient population using mail order pharmacy services with the results of a model simulating the effect of community pharmacy services for the same population. METHODS: The data source was a large public employees' retirement system pharmacy claims data for the period January 2000-September 2005. The unit of analysis was the course of drug therapy (CDT), representing the combination of unique patient ID, and unique. A retrospective cohort study was comparing utilization and reimbursement patterns in community vs. mail order pharmacy. A simulation model was employed to assess drug utilization and reimbursement in community pharmacy using mail order pharmacy claim data. Drug claims were aggregated to obtain a set of courses of drug therapy (CDTs) representing unique patient IDs and unique drug name, formulation, and strength. The model assumed that CDT in community pharmacy would have utilization patterns similar to those found in mail order pharmacy. RESULTS: A total of 796,859 CDTs for 138,654 patients were included in the study. Patients had an average of 6.7 CDTs, with 11.4 claims per CDT and an average of 2.5 years in therapy. The study found high drug therapy discontinuation ratios, with 78.1 % of all CDTs discontinued during the study period. The use of mail order was estimated to result in an increase of 3.4% in drug utilization in comparison with community pharmacy. The effect of mail order pharmacy on utilization varied by drug and by therapeutic class. CONCLUSION: Mail order pharmacy increases drug utilization. Pharmacy benefit managers should implement programs to identify and manage patients, diseases and drug therapies with high therapy discontinuation. Decision makers should carefully evaluate the utilization and cost effects that result from the implementation of mail order pharmacy programs.