When a patient rightfully complains about drug costs, they are complaining about their deductible or copay, not the price of the drug. Insured patients don’t and shouldn’t care what the retail price of the drug is because they don’t ever pay it. But they should care about their deductible because from 2009 to 2015, in-network deductibles increased an average of 76.5% according to a report by PricewaterhouseCoopers (PwC).
Stalled efforts in Washington, D.C. to come to a consensus about how to best offer healthcare to Americans means that patients and other stakeholders have an increased opportunity to vocalize what they need and expect from the health system.
How drug pricing works: A basic overview
Insurance companies try to reduce how much they spend on medications by creating tiered formularies. The least expensive medicines (often older medications or generics) with the lowest out-of-pocket costs to the patient are typically on the “preferred” tier, meaning they can be accessed by a patient with a prescription at a low price and without additional paperwork submitted by their healthcare provider. The process to determine which drugs are “preferred” is very dependent on how well a pharmacy benefits manager (PBM)—a company hired by the insurance company (E.g. Express Scripts or CVS Caremark)—negotiates with the drug manufacturer. They negotiate the “wholesale” purchase price of medications along with the size of rebates the drug manufacturer agrees to kick back to the PBM and, sometimes, the insurance company. In order for the drug manufacturer to have a competitive bid with the PBM, they must offer a high rebate to them. If they raise the rebate, many times they are forced to raise the price of the drug to compensate.
Some of the most expensive drugs, such as biologics, are prescribed to chronic disease patients and will be accompanied by a large copay or coinsurance by patients that may or may not be affordable depending on the tier the drug is placed. Other times drugs become more expensive unexpectedly if an insurer changes the formulary and tiering of drugs offered (with or without warning). When drugs become hard to access or unaffordable, chronic disease patients are particularly vulnerable as they use drugs to keep their disease stable. It’s possible for a person’s health status to change if his or her medicine is delayed or unavailable as they determine their ability to afford it. A disruption in the insurance company’s formulary can mean permanently damaging regression from their disease.
But it’s not all bad news for patients when it comes to drug pricing because manufacturers responded to frequent PBM negotiations and the unpredictable fluctuations in patient’s out-of-pocket costs that result by developing patient assistance programs, such as copay cards. An enrolled patient uses a copay card in combination with their insurance coverage at the pharmacy when they submit a prescription. The insurance company covers the portion of the drug price depending on the formulary tier they have placed it on. The copay card covers the gap between the tiers that offer the lowest out-of-pocket coverage for the patient and the tier that offers the highest out-of-pocket coverage for the patient. Suddenly, expensive medications seem more affordable (from a patient’s perspective), plus studies show that patient assistance programs result in better adherence and health outcomes. However, as explained by the University of Michigan Center for Value Based Insurance Design, the downside of patient assistance programs are that they have the potential to increase healthcare costs for everyone if they are administered irresponsibly by pharmaceutical manufacturers because they can incentivize healthcare providers and patients to skip over viable and clinically appropriate, less expensive generic options.
Related Content: Lowering Cost-Share for High Value Meds Improves Adherence
How patients can contribute to lowering drug prices right now
Instead of railing against pharmaceutical companies to cajole them to lower prices, there are more productive ways that patients can get lower drug prices. The first recommendation stops the price pain now. The next are investments in future lower prices.
Today, Be A Smart Shopper: Why don’t you comparison shop for your prescription drugs? Because your insurance company doesn’t want you to. The price you pay at the pharmacy is dictated by your insurance company, and you are most likely to complain when your deductible or copay is high, regardless of the drug retail price. And, like airplane seats, you may be paying a lot more than the person next to you. The pharmacy down the street may be cheaper. Or, your drug may be cheaper without using your insurance.
Here are four ways that patients can seek out lower drug prices. They are all based on one simple approach: Ask Before You Buy.
- Go to websites that feature comparison shopping, or call drug stores in your area and ask what they charge for your prescription.
- Ask your physician for the cheapest pharmacy because some physicians have preferred pharmacies that have lower prices.
- Ask the pharmacist if you can buy the drug for less without using your insurance. For example, a Consumer Reports study showed that Metformin (a common diabetes medication) costs $4 for a one month supply or $10 for three months at large stores like Walmart or Target. But using your insurance and paying a copay would be almost three times the price at $11 for a one-month supply!
- See if you are eligible for financial assistance. There are non-profit organizations, such as Good Days and NeedyMeds, that help eligible patients research drug price information and better afford their medications.
Related Content: The Crazy Way Drugs are Priced and What Can Be Done About It
Stop the price pain in the future: Internet activism
- Generic drugs are cheap, but they could be cheaper with more competition. There is a backlog of more than 4,000 generic drugs waiting for U.S. Food and Drug Administration (FDA) approval. The FDA is asking for the public’s feedback on this exact issue until September 18, 2017. Urge them to approve generics more quickly without sacrificing safety and efficacy so that they can compete with generic drugs already on the market. Submit your comment here: https://www.federalregister.gov/documents/2017/06/22/2017-12641/administering-the-hatch-waxman-amendments-ensuring-a-balance-between-innovation-and-access-public#open-comment
- Do you have seasonal allergies or heartburn? More than 80 million people do, and if you are part of this group, you likely once took a prescription drug that is now available over the counter. This means the medicine is cheaper, but patients are paying for it entirely out of their own pocket rather than cost-sharing (paying a copay or coinsurance) with the insurance company. More prescription medicines need to be available over the counter, and insurance companies need pay for them. In addition, the government needs to allow patients to pay with their tax-free Health Savings Accounts and Flexible Spending Accounts, too. Further, when insurance companies make favorable deals with manufacturers, securing cost savings on medications, savings should always be passed down to patients in the form of lower premiums, deductibles, and copays/coinsurance. Ask your state and federal legislators to write bills that protect patients.
An individual voice can be powerful when it comes together behind a common message with like-minded people willing to advocate for change. People living with chronic disease can press our elected leaders and corporate America to develop better policies and business practices that will improve everyone’s access to medications.
To learn more about drug pricing visit our website: Creaky Joints.