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December 13, 2017

Why some Rx drugs cost less without insurance

Daily Briefing

    In up to 10% of instances, U.S. residents who have health insurance can get prescription drugs at lower prices without using their health plan, according to an industry expert cited in a ProPublica/New York Times investigation published Saturday.

    Insurers cited in the story say such instances are rare, adding that consumers who purchase medication without their insurance might wind up paying more over time.

    Details of the investigation

    For the investigation, ProPublica and the New York Times detailed instances in which insured consumers reported that they purchased a prescription drug at a lower price  through companies such as GoodRX and Blink Health than they would have paid through their insurance.

    For example, one individual would have been required to pay $83.94 for a three-month supply of the generic cholesterol drug Crestor when using his UnitedHealthcare plan at Walgreens. By purchasing the drug through Blink Health without using his insurance, he paid $45.89.

    The reporters also cited a woman covered through an employer-sponsored high-deductible health plan that uses the drug benefit manager CVS Caremark, a subsidiary of CVS Health. The woman learned that the prescription lotion she uses to treat rosacea would cost $99.03 at CVS in 2018, while the same prescription would cost only $75.57 without her insurance through GoodRx.

    Reporters at ProPublica and the Times also conducted their own experiment to see whether they could obtain the 100 most prescribed drugs listed on GoodRX at lower prices without using their respective insurance plans. According to ProPublica/New York Times, ProPublica employees have prescription drug benefits managed by OptumRX—a pharmacy benefit manager (PBM) owned by UnitedHealth Group—while New York Times employees have prescription drug benefits managed by the PBM Express Scripts.

    Of the 100 drugs reviewed, ProPublica/New York Times found that GoodRx featured lower prices for at least 40 of the drugs than the reporters' PBMs. BlinkHealth also offered some drugs at lower prices than their PBMs' out-of-pocket costs, though less frequently than GoodRx.

    Price variation stems from complex 'layers of negotiations'

    The reason for the price variations stems from the "complicated layers of negotiation" made behind the scenes by insurers and PBMs, ProPublica/New York Times report.

    Insurers typically negotiate prices with PBMs for large batches of generic drugs at one time, meaning insurers might not receive the lowest prices available for every single drug included in the batch.

    In addition, some insurers have set copayment amounts for prescription drugs, and require enrollees to pay those co-pays even if the drugs cost less than the copay amount.

    Though there are no nationwide data showing how often consumers could purchase lower-cost prescription drugs without using their insurance, ProPublica/New York Times cite one industry expert who estimated such occurrences account for up to 10% of U.S. drug transactions. According to ProPublica/New York Times, that figure would mean up to 400 million prescriptions annually could be purchased at a lower price without insurance.

    PBMs, insurers say consumers usually get better deals with insurance

    According to ProPublica/New York Times, PBM and insurer representatives say instances in which consumers can access drugs at lower prices without their insurance are the exception and not the rule. Mark Merritt, CEO of the Pharmaceutical Care Management Association, said, "There are three to four billion generic scripts written a year, and in the vast majority of cases, [consumers] are going to get a better deal by using insurance."

    In the Crestor case, UnitedHealthcare spokesperson Matt Burns, who had permission from the customer to discuss the matter, said while the individual was able to obtain Crestor at a lower prices without using his insurance, he was not able to do so for the four other prescription medications he uses. Burns added that the copay for Crestor under the individual's plan is set to drop significantly in January, largely because the drug's price decreased this year.

    Michael DeAngelis, a spokesperson for CVS Health, similarly said cases of patients finding better prices without using their insurance are rare. Further, DeAngelis said consumers who purchase drugs without using their insurance, particularly those in high-deductible health plans, could end up spending more over time because such spending does not count toward their deductible (Ornstein/Thomas, ProPublica/New York Times, 12/9).

    ***Editor's note: Daily Briefing is published by Advisory Board Research, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group. UnitedHealth Group separately owns UnitedHealthcare.

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