Why on earth do we use insurance to pay for a $4 benefit? That makes no sense………
Cash price Rx plans already exist producing significant savings for consumers. Why aren’t more employer sponsored health plans moving to cash pay Rx plans? Do they not understand the economic value or are they welded to status quo strategies fueled by lack of critical thinking skills?
Bill Roth’s article “Return of Cash Pay For Drugs” is a must read for plan sponsors. The link to Bill’s article follows our “Cliff Notes” below:
“CLIFF NOTES” to save you time…………..
- The pharma industry started as a cash business and at least for generics and some brands, it appears to be returning to that.
- Pharmacy is walking away from brands………..“Our pharmacy changes out roughly 90 of the 100 branded prescriptions we receive. We view ourselves as patient advocates, and the doctor doesn’t know the cost to the patient when the prescription is written. If a generic is available in the drug class, it is better for the patient and better for the pharmacy.”
- With 90%+ of prescription products being available generically and at consumable price points, whole new markets have opened for cash.
- In 2022, a Prescryptive Health report indicated that 61% of consumers surveyed had paid cash prices for prescriptions even though the drugs were covered by their health insurance
- In January 2022, Mark Cuban jumped into the game with Cost Plus Pharmacy, epitomizing the business model of buying generic product at wholesale prices and charging a rough 15% markup, $3 dispensing fee, and a $5 shipping fee. In early 2023, Amazon Pharmacy announced RxPass for Amazon Prime members, which applies a $5/month charge and an unlimited amount of prescriptions…………Mark Cuban’s Cost Plus pharmacy had generic Gleevec for $13.40/month compared with the list brand price of $10,996/month
- Consumers can tag onto a PBM net contract with discount cards that results in paying the same cash price as a pass-through plan sponsor. Many Wall Street analysts now use the discount card vendors to assess an estimated rebate from the manufacturer to the PBM.
- “I take has a $393 copay for the brand, $207 copay using insurance for the generic, or $18 cash price for the exact same product and manufacturer. Reports like this are ubiquitous on the internet.”
- Wholesalers and retailers went from making 3% to 5% on the brand to 20%+ on the generic.
- Enter the original shift back to cash pay in 2006: Walmart announced its $4 (30-day supply) and $9 (90-day supply) generics programs, stunning the industry…………….a bottle of a 100-count pricing out as low as $1 to $2 per bottle.
- From a financial and logistics perspective, the movement for generics to cash is the most simple and straightforward view of discounting. The dollar flow is very easy to follow because the pharmacy typically buys it at low net cost, marks it up, and sells it. Even when insurance is applied, there are no rebates to PBMs, little to no price increases after 2017,
- For nearly all retail pharmacies, brands are now loss leaders and generics are the only products on which pharmacy makes money.
- Cash pay pharmacies are growing as well as discount programs, such as Blink Health, Pharmacy Checker, Optum Perks,SingleCare, RxSaver, WellRx, America’s Pharmacy, Costco MPP, SaveonMeds, RxSavings Plan, FamilyWize, ValpakRx, Choice Drug Card, InsideRx, AARP Prescription Discount, and others.
READ ARTICLE SOURCE: HERE
HOMEWORK READING ASSIGNMENT:
Navigating Cash-Pay Prescriptions: A Guide for Pharmacies – Risk Managers
Amazon Pharmacy RxPass Program – Risk Managers
Greenback Health – Simplifying Healthcare Costs Through Innovative Technology – Risk Managers