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Prescription drug pricing has become a major concern in the United States, with patients and their employer-sponsored health plans facing exorbitant costs even after factoring in rebates. In this article, we delve into the intricacies of the pharmaceutical industry, shedding light on issues related to transparency, consumer behavior, and potential solutions.
Here’s a comprehensive understanding of the challenges and opportunities available to self-insured employers, following an insightful conversation I had with Mark Cuban, founder of Mark Cuban Cost Plus Drug Company, and healthcare influencer Stacey Richter on the “Relentless Health Value” podcast.
Drug manufacturers pay rebates to pharmacy benefit managers (PBMs) for placing their drug on the PBM’s formulary. A significant aspect of the prescription drug pricing dilemma revolves around rebates, notably the high net prices post-rebate.
As Stacey mentioned, “If you take the list price and even if you subtract the rebate, the net price after rebate is still really high in a lot of cases.”1
She’s right, it is really high. Competition usually dictates pricing in most sectors, but in our industry, competition happens as PBMs make their formularies. PBMs will negotiate with manufacturers, who sometimes pay 60% to 80% in rebates, just to be listed on the formulary.
Transparency = Savings
The lack of transparency in the pharmaceutical industry further exacerbates the challenges faced by consumers. Transparent pricing is crucial for informed decision-making and cost-effective healthcare. With pricing listed to patients and their plan sponsor up front before the medication is purchased, along with consumer pricing tools to effectively shop around, competition happens, driving value-purchasing, and ultimately, savings.
Achieving transparency is not only about disclosing prices but also about aligning the incentives of all stakeholders involved. This includes PBMs, manufacturers, benefits consultants and, most importantly, the end consumers. Transparent pricing models foster trust and empower consumers to make informed choices, leading to significant cost savings.
Actually Shopping for Prescription Drugs
One of the key challenges we highlight in the conversation is the changing landscape of consumer behavior in the realm of prescription drugs. There are inherent challenges in the traditional approach to obtaining prescription drugs. The conventional process, characterized by hurried physician visits and uncertain pricing at the pharmacy, often leaves patients in a precarious position. If they can afford the drug, they’ll pick it up; and if they can’t, they don’t get it.
This has been one of the biggest challenges for Scripta, Cost Plus Drugs, and many people. However, with the evolution of consumer behavior and innovative solutions, there is hope for a more streamlined and affordable process.
Solutions Exist. Don’t Wait.
Amid the challenges, there is optimism surrounding potential solutions to address the prescription drug pricing crisis. The recognition of the problem has sparked the emergence of innovative solutions aimed at enhancing affordability and accessibility to prescription drugs. Initiatives led by organizations such as Scripta Insights and Cost Plus Drugs demonstrate a commitment to changing the status quo and providing much-needed relief to patients.
Cost Plus Drugs has all their prescription pricing publicly available, providing transparency and trust to their buyers. Scripta Insights is using this, and other drug pricing information, in order to provide comparison shopping tools. I’m just so happy to hear that there’s all of these hands and innovative thinkers now trying to solve this problem for patients who really need the help.
Conclusion
In conclusion, the complexities of prescription drug pricing in the United States require a multifaceted approach. The issues of high net prices post-rebate, the lack of transparency, evolving consumer behavior, and the urgent need for solutions necessitate collaboration among stakeholders.
By addressing these challenges head-on and fostering a more transparent and competitive pharmaceutical market, it is possible to achieve affordable and accessible prescription medications for all. The ongoing efforts of industry leaders and innovative thinkers bring hope for a future where patients no longer face the daunting choice between their health and financial well-being.
For more in-depth insights on these hot topics, listen to my full conversation with Stacey and Mark on Episode 418 of the “Relentless Health Value” podcast.
References
Richter, S. EP418: Mark Cuban With Some Advice for CEOs and CFOs of Self-insured Employers, With Mark Cuban and Ferrin Williams, PharmD, MBA, From Scripta. Relentless Health Value. 2023. Accessed November 16, 2023. https://relentlesshealthvalue.com/episode/ep418-mark-cuban-with-some-advice-for-ceos-and-cfos-of-self-insured-employers-with-mark-cuban-and-ferrin-williams-pharmd-mba-from-scripta
About the Author
Ferrin Williams is Chief Pharmacy Officer at Scripta Insights, the Rx Navigation™ Company that guides self-insured employers, health plans and their members to prescription savings. She has more than 15 years of experience in the pharmacy industry, bringing a unique perspective that spans the retail pharmacy, pharmacy benefit manager (PBM) and broker/consulting sectors. Her expertise ranges from pharmacy operations and services to innovative clinical programs, pharmacy audit, alternative payer funding, and specialty drugs. As Chief Pharmacy Officer, Ferrin leads the clinical strategies organization at Scripta responsible for devising innovative cost-containment strategies for prescription drugs, ensuring Scripta clients, members (and their providers) are provided with best-in-class clinical insights and tools. Williams earned her B.S., Doctor of Pharmacy and MBA degrees from the University of Oklahoma.
