High costs, high deductibles inspire consumers to pay cash for drugs

If innovation is the mother of necessity, the market for disrupting the pharmaceutical industry could be unlimited.

Attention to the cost of prescription drugs intensified this month when the Food and Drug Administration approved the drug Aduhelm for Alzheimer’s disease, which the manufacturer Biogen priced at $ 56,000.

But for policymakers, taxpayers and patients, high drug prices are nothing new. Nearly 90 percent of consumers believe the federal government should negotiate directly with drug producers to lower prices, according to a June survey by the Kaiser Family Foundation. Respondents across the political spectrum have agreed that reducing prescription costs should be a primary priority for President Joe Biden’s administration.

“If you look at the national survey after the national survey, this is essentially the only bipartisan issue there is,” said David Whitrap, vice president of communications and outreach at the Institute for Clinical and Economic Review (ICER). “In all Republicans and Democrats, this is a problem that has consumed the general public.” ICER estimates that a year’s worth of Aduhelm, also known as adducanumab, would actually cost patients no more than $ 8,300 – even a large sum, but much less than Biogen’s list price.

Some consumers are made in anticipation of government intervention or the pharmaceutical industry to act alone to reduce prices. That’s why so many are opting to pay in cash for their general prescriptions rather than using their benefits in health insurance pharmacy.

A growing number of startups have built companies that benefit from this trend. GoodRx achieved licorice status with an initial public offering of $ 1.1 billion by 2020. The Santa Monica, California-based company connects patients, even those who are uninsured or underinsured, to discounts on to generic medicines through their app and website, which allow them to compare shopping at local drugstores. Pharmacies often offer discount programs for large customers. And some independent pharmacies no longer accept insurance, instead buying medicines from wholesalers and selling them to customers who pay in cash.

The growing prevalence of highly deductible health plans plus the chronic lack of transparency regarding drug prices have created a dynamic where it makes sense for a lot of patients to pay for medicines out of their own pocket. By 2020, 47% of the workforce will be enrolled in a highly deductible health plan, up from 36% in 2015, according to the Kaiser Family Foundation. Highly deductible policies are also common on HealthCare.gov and other health insurance exchanges and online brokerages such as eHealth.

The success of GoodRx has inspired competitors to enter the market, with companies such as CoverUS, Blink Health, WellRx and more promising to reduce the cost of drug users if they run out of insurance.

“It’s easier, it’s convenient. It’s a fixed price. I know what it will cost. The reimbursement system feels very complex for the typical patient,” said David Goldhill, who serves on the Leapfrog Group’s board of directors. and is CEO of Sesame, a marketplace for pharmacy and medical services for direct-pay patients. Americans will spend $ 406.5 billion out of their pocket for health care in 2019, according to the latest data collected by the Centers for Medicare and Medicaid Services.

And while drug reduction startups offer some savings, they still rely on a fundamentally broken pricing system, said Antonio Ciaccia, who heads research firm 46brooklyn. The prices consumers pay to the pharmacy bank, even after discounts, are based on contracts negotiated with pharmacy benefit managers that have artificially inflated drug prices, he said.

Ciaccia said pharmacies that accept only cash payments may have a greater potential to disrupt the drug retail market than discount programs and apps Consumers are becoming wise about the fact that they can’t they get the best deal by using their insurance, especially when high-deduction plans become more widespread, or from sources like GoodRx, he said.

“People are slowly waking up to this reality that people who have told us they are saving us money are not saving us – they are tearing us apart,” Ciaccia said.

In Pittsburgh, Blueberry Pharmacy says its customers saved more than $ 100,000 by paying in cash for medications last year instead of going through their health insurance, for example.

“Some of these generic drugs can be acquired for a penny per pill,” Ciaccia said. “What they’re saying is, ‘Look, we’re pulling sticker prices.’

By cutting pharmacy benefit managers and buying directly from drug wholesalers, independent pharmacies can offer lower prices, said Kurt Proctor, vice president for strategic initiatives at the National Association of Community Pharmacists. Although these startups and pharmacies may not threaten the dominance of PBMs, their mere existence presents a public relations nightmare for intermediaries, he said.

Pharmaceutical benefit managers have a track record of reducing the costs of medications prescribed to patients, the Pharmaceutical Care Management Association maintains. “While pharmacists play an important role in our health care system, the single focus for everyone in the supply chain of prescription drugs, including PBMs and pharmacists, is to make prescription drugs more affordable and accessible to patients,” he said. wrote a spokesman in an email.

As the lines between insurance companies, mail-order pharmacies and PBMs continue to blur, independent pharmacists will face increasing downward pressure on what they pay to dispense medicines, Proctor said. Finally, consolidation among other players could inspire more pharmacies to abandon insurance altogether.

“As those pioneering pharmacies show that they have a legitimate business model, and that it’s sustainable, I would expect others to take a really hard look at it and say,‘ You know, that could be for us, ’” Proctor said.