|Guest blog content provided to Q4iNetwork Consultants by freshbenies
If you’ve been hearing horror stories about increased prescription out-of-pocket costs, you’re not alone. And with the trend toward shrinking formularies, you’ll likely start hearing more of them.
Have you considered adding a strong Prescription Savings Program to your benefits package? This inexpensive benefit can be a HUGE help to employers and employees who are trying to save on their bottom lines.
Here are answers to 4 common questions as you consider this option to help your employees— and your business.
1. Why do Rx Savings programs work?
Pharmacy Benefit Managers (PBMs) negotiate drug pricing from each pharmaceutical company for each pharmacy. In other words, PBMs negotiate pricing on every drug at every pharmacy, so there are different prices at EVERY pharmacy!
Pharmacies negotiate prices depending on their customer base. For instance, Pharmacy A might have a lot of soccer mom customers, so they charge less for Amoxicillin to get moms in their door, but charge a lot for heart medication to recoup the dollars they lose on Amoxicillin. Meanwhile, Pharmacy B might have a lot of retired/elderly customers, so they charge more for Amoxicillin and less for heart medication.
About two-thirds of drugs have pricing that fluctuates. In this case, both locations might have the same average savings, but on very different drugs.
All of this fluctuation makes it hard for a normal American to be a good consumer and find the best price. Most employees just pay the price negotiated by their insurance plan at their pharmacy, which may or may not be the best price available.
A Prescription Savings program works because it offers another option and provides “behind the scenes” transparency to employees.
2. Who are Rx Savings programs good for?
A Prescription Savings program is good for…
- Self-funded employers because it keeps some of the Rx costs off the plan.
- Fully-insured employers with higher out-of-pocket cost plans or a deductible on the prescription benefit.
- All employers because it’s a solution that helps with the issue of increased out-of-pocket costs as they’re forced to pass more expense to their employees.
- Employees because if you can put a tool in their hands that helps them find real-time pricing, it allows them to be better healthcare consumers. Specifically, a Prescription Savings program is good for employees who…
- Have prescriptions that are expensive and only partially covered by insurance.
- Have prescriptions that are non-formulary.
- Don’t have insurance or have family members who aren’t insured.
3. When do Rx Savings Programs work best?
For common generic drugs with a $5 co-pay under insurance, employees should just pay the money.
Some drugs - about one-third - have pricing that’s set by the pharmaceutical company with NO fluctuation between locations. The good news is that employees can quickly tell by searching their drug using the Prescription Savings plan’s price-look-up tool.
On about two-thirds of drugs, not only is there a big discount from the retail price, but there can be a LOT of fluctuation in price between pharmacies. If a drug is lower in one store, it probably means another drug is more expensive there than at other stores. In reviewing medications in a price look up tool, it’s not uncommon to see them fluctuate from $4 at Walgreens on one corner to $150 at a Walmart just down the street (and vice versa).
Here’s a quick example:
Nick’s doctor prescribes Pantoprozale for his hereditary acid reflux. The standard price is $53/month through Nick’s insurance. By using an Rx Savings network, Nick is able to see if there is a discount on this drug in his local area. In this case, he learned that one pharmacy offered it for 4 times less than another— and 10 times less than the retail price he would’ve been charged! Nick went from having to pay $53/month or $636/year to $5.15/month or $61.80/year.
It’s always a good idea to flash your insurance card AND savings program info at the pharmacy. Then, the pharmacist can determine which provides the better price. Here’s another great story from one Prescription Savings plan user:
"With insurance, my monthly prescription was $88, but with my Rx Savings plan it's only $48. The first time I used it, the pharmacist was skeptical and assured me that nothing was going to be cheaper than using my insurance. I asked her to run my Savings plan anyway and when the total came out $40 cheaper, she was so impressed she asked me how to get the program!"
Sometimes the Rx discount includes the entire immediate family, which is helpful for those employees who don't have full insurance coverage for their families.
4. What should I watch out for?
Not all Prescription Savings programs are created equal, so beware!
There are some that give weak discounts and at very few locations, so ask for this information. Some programs advertise a broad savings range that sounds good, but you’ll want to know what their AVERAGE discount is.
For instance, “Save 10 – 85% on prescriptions” sounds promising. But if the average savings is only 18%, that’s misleading. Look for a broad range and a 40% or more average discount.
Also, find a program that allows employees to look up prescriptions at local pharmacies in an app and/or portal. First, you want to be sure to provide technology that works for everyone. Second, you want to know that the program offers savings at thousands of locations and verify that there are plenty in the group’s local area.
With a double-digit increase prescription trend (for the next decade), we know formularies will shrink. Why not provide a tool that helps employees and their families with the out-of-pocket Rx costs AND teaches them to be better healthcare consumers?
Photo credit neyro2008