Have you ever been in line at the pharmacy, staring at the display of reading glasses and eye-care solutions, only to overhear an awkward conversation at the front of the line about the prescription being too expensive? Have you been the person at the front of the line trying to have this conversation?
This is a point of failure for the health-care industry. The time to have a conversation about medication cost is before leaving the physician’s office, but that rarely happens.
The problem is that your doctor likely has no idea how much a medication costs for you—because there are a wide range of prices for every drug. There are any variables that affect the drug price for each of us:
- Formulary. Formularies are the list of drugs that a health plan or employer develops to get medications at a lower price for their constituents. It’s negotiated and specific to each company. These prices are not public information because the formulary protects confidentiality of the companies. Formularies are redesigned every year and often get mid-year changes, which affects drug prices for individuals. Also, the formulary assigns drugs into tiers, which determines the copay or coinsurance to be paid at the register. Tier 1 drugs cost the least, and the prices go up with the tiers.
- Specialty drugs. Specialty drugs are a small class of drugs that typically get the label based on three factors: high cost, high complexity, and high touch. High cost is usually anything that costs $1,500 or more per month. High complexity means the medication is technically difficult to produce. High touch refers to any medication that requires more professional handling, shipping, or storing.
- Generic. Does the medication prescribed have a generic version? Is the generic available? Generic medications are chemically equivalent to the brand name but are a fraction of the price. When the exclusive provisions run out for a particular drug, other manufacturers can get the formula and start producing and selling it. Unfortunately, not all markets or pharmacies carry all the generics available, meaning there could be a generic for the prescription, but the local pharmacy doesn’t carry it.
- Pharmacy. Pharmacies do not charge the same price for the same drugs. The difference in price can be an order of magnitude, especially if the pharmacy accepts a discount card like GoodRx. For example, insulin aspart (NovoLog) used to treat type I and type II diabetes, has a variety of retail prices (see table).
The manufacturing cost may be the same for every vial of insulin, but fees are added on to the medication at each step in the distribution chain. Also, the end pharmacy can assess a markup on the medication, which may or may not be in line with the cost at other pharmacies.
An independent survey of retail pharmacy representatives found that only 16 percent of reps tried to offer the lowest cost, while 93 percent were focused on offering a “competitive price.” The issue with pharmacy price shopping is that the final cost is not easily comparable.
- Rebates. A rebate is a negotiated discount for drugs. The decrease in price is shared between the negotiator (health plan, pharmacy benefit manager, or employer) and the consumer. Rebates help get new, expensive medications to people who could not otherwise afford them.
For patients to get the drugs they need at prices they can afford, physicians need patient-specific information. Physicians are, unfortunately, a large source of high drug costs, and it is because they are forced to prescribe with blinders on. This is where health-care tech companies are bridging the transparency gap. Health-care technology removes those blinders and gives physicians visibility into the real cost of each prescription for each individual patient.
Manage your costs
In the meantime, here’s what you can do to manage your medication costs.
- Check your insurance card for your plan name, and then head to your insurance company’s website to look up the formulary. You can also call and ask them to mail you a copy. Remember that the formulary can change, so be sure to update your records, and take a copy with you to your doctor’s appointments.
- If your doctor recommends a drug that is listed on a higher tier, ask about generic or other lower-cost alternatives. Sometimes, simply changing the brand can make a big difference.
- If you need a specific drug that is not on the formulary, you can file an appeal with your insurance company to request that it be added.
- If you are changing insurance plans, check the formulary to see if your current medications are covered before making the switch.
- If you’re taking a pricey medication, visit the drug company’s website to look for rebates.
- Shop around for pharmacies to find the best deals for your medications. There can be significant price differences among pharmacies.