This paper discusses the effects of powerful confounding events on the evaluation of an innovative health care payment program—an experiment with capitation payment for pharmacy services for Medicaid recipients. The research, conducted at the University of Iowa from 1975 to 1982, used a sophisticated experimental design; it was funded by the National Center for Health Services Research, the Health Care Financing Administration, and the State of Iowa, representing an investment of over two million dollars. Despite this investment, and the interest of many at the national level, events in the research environment during this period may well have distorted the conclusions of the research. Thus this case study highlights the problems of conducting evaluation research. particularly social experiments, on innovative programs perceived as threatening to the status quo.