As prescription drug prices continue to rise, more "cash" pharmacies, which sell generic medications outside of insurance, are opening around the United States—saving some customers hundreds of dollars on their prescriptions, Adiel Kaplan, Kenzi Abou-Sabe, and Vicky Nguyen report for NBC News.
Our take: 10 health policy topics—including drug pricing reform—to watch in 2022
The struggle over high prescription drug costs
The costs of prescription drugs, which are somewhat controlled by pharmacy benefit managers (PBMs) who negotiate prices for insurance companies, have been on the rise for more than ten years now, and many patients have struggled to afford their medications.
Currently, the Federal Trade Commission has opened an inquiry into the PBM sector, particularly how vertical integration in the industry impacts access and pricing within the prescription drug market.
"An over-consolidated PBM industry is squeezing out the resources pharmacists need to provide a high level of care and access for patients," said Ilisa Bernstein, interim CEO of the American Pharmacist Association.
However, the PBM industry has argued that it helps reduce costs for patients, as well as insurers. PBM industry leaders say that the high cost of prescription drugs is largely due to pharmaceutical manufacturers.
"Our job is to drive down costs on behalf of the consumer and those paying the bill for health insurance," said JC Scott, president of the Pharmaceutical Care Management Association. "Without us, there's nothing standing between the consumer and the … drivers of high drug costs. I'm confident that once the FTC digs in and understands that, they'll reach that same conclusion."
Legislators at both the state and federal levels have introduced bills to rein in the costs of prescription drugs, but progress has so far been slow. Notably, the Inflation Reduction Act, which recently became law, includes several provisions to reduce prescription drug costs, though they are largely limited to Medicare beneficiaries.
Cash pharmacies offer some patients cheaper medications
To reduce the costs of some prescription drugs, some companies are establishing "cash" or "self-pay" pharmacies, which offer generic medications at wholesale prices, plus a small markup. By going outside of the insurance system, cash pharmacies are able to avoid potential fees and rules that increase a medication's cost.
For example, the Mark Cuban Cost Plus Drug Company (MCCPDC) is an online pharmacy that offers significant discounts on generic medications. As of June, MCCPDC offered over 700 generic medications, including those for cancer, diabetes, and gastrointestinal and heart conditions, and the pharmacy said it is "continuously working to add new drugs as quickly as possible."
According to a study published in the Annals of Internal Medicine, Medicare could have saved billions of dollars if it had purchased generic drugs through MCCPDC instead of going through the existing generic pharmaceutical distribution and reimbursement system. Overall, the researchers found that Medicare could have saved $3.6 billion on 90-day supplies of 77 out of 89 different generic medication in 2020 if it had purchased them through MCCPDC instead of Medicare Part D plans.
Local pharmacists have also opened their own small cash pharmacies to help patients save money on prescription drugs. For example, Nate Hux, a pharmacist in Pickerington, Ohio, recently opened Freedom Pharmacy, a cash pharmacy next to his regular pharmacy that accepts insurance.
According to Hux, having two separate pharmacies has allowed him to advise patients about the best place to fill their prescriptions. For drugs without generic alternatives, the insurance pharmacy would most likely be the better choice, but for other drugs, including those that have recently gone generic, the all-cash Freedom Pharmacy would likely have better deals.
"Generic Viagra and generic Cialis, those types of things, are way more expensive inside the system than just doing self-pay pharmacy," Hux. "Those would be $1,000 for a 30-day supply, maybe. And here [at Freedom], they're about $15 for a 30-day supply."
"For about 25% of people, it makes more sense to fill at Freedom," Hux added. "If I didn't own both I wouldn't know. … As I'm processing claims, one of the best things that I can see is which world is best for my patient. Is it the insurance world? Or is it the noninsurance world?"
According to Avalere Health, 91% of prescriptions in the United States are currently filled through insurance. However, cash pharmacies are beginning to grow in numbers, and many pharmacists say that they believe the savings offered and the ability to shop around for different drugs will successfully draw in customers.
"Right now, we have a system that is completely predicated upon artificially inflated drug prices," said Antonio Ciaccia, president of 3 Axis Advisors. "What cash pharmacies offer is the opposite — the antithesis. It's a return to retail fundamentals."
At Freedom Pharmacy, "sometimes it's less cost, sometimes maybe a little bit more. But at least they have a choice. They know exactly what the price is upfront," Hux said. "When consumers have choices, it's good for everyone." (Kaplan et al., NBC News, 8/19)
