Would you like your medicine waiting for you at your door when you arrive home from surgery? Amazon may not only be delivering your goods and groceries, but also prescription medicines.
Amazon is starting to make more concerted moves towards the multibillion dollar pharmacy market. CNBC reports that Amazon leadership has been mulling over getting into the pharmacy business for more than a couple years, but CEO Jeff Bezos is getting more serious with hiring a new general manager to lead the effort and formulate a strategy.
This is attractive for everyday consumer goods like books and household items, but it is likely to mean far more for patients struggling every month to pay the overinflated price tag of the drugs that keep them alive. – Drug 411
Pricing transparency, co-pay vs. self-pay
With the trend for consumers footing more of their own health expenses through high deductible health insurance plans, it may be prime time now for Amazon to enter the pharmacy market and also good news for consumers. Amazon may bring more price transparency to a market where many consumers unknowingly pay more for prescriptions than necessary.
Some PBMs (Prescription Benefits Managers) take more money out of consumers’ pockets who use a co-pay versus self-pay through a practice called clawbacks. Pharmacists are not allowed to talk about it in many states without risking high fines from the PBM and potentially losing the business.
Here’s how clawbacks work. If you need a prescription medicine that the insurance company has agreed to pay your pharmacist $6, and your co-pay is $10, $20 or sometimes much more, some PMBs will collect your full co-pay and keep the difference. You could self-pay without going through insurance and pay much less. But your pharmacist may not be able to tell you your options without violating its PBM contract.
A June 2016 survey by the Pharmaceutical Care Management Association found that out of 650 pharmacists more than 38 percent said they were unable to tell patients about cheaper cash prices 10 to 50 times in the previous month.
This practice currently varies by state, and legislators are starting to address the practice. In 2016, Louisiana passed legislation to direct pharmacists to provide consumers with their options, and in 2015, Arkansas passed legislation that made it illegal for PBMs to collect more from consumers than the pharmacy will be paid.
Right now, there’s a bill that is making its way through the Connecticut General Assembly. Senate Bill 445 seeks to eliminate PBM contracts that prohibit pharmacists from sharing all relevant information with the customer. The bill made it out of the public health committee with a unanimous vote and is awaiting action by the full Senate. – NBC Connecticut
Some say that by self-paying, consumers with high drug costs would not get the benefit of those costs being applied to insurance deductibles. But that debate would depend on the actual savings. A consumer could be better off even without hitting their deductible.
One Ohio pharmacy owner showed how a PBM directed a pharmacist to charge a $189 co-pay for which it would pay the pharmacy $116. The PBM kept $73 from the consumer for that transaction.
Cash prescription market is a $100B business
In 2015, $300 billion was spent on all prescription drugs. However, plenty of people already self-pay. The cash prescription market is estimated at $100 billion per year in the U.S. and growing at more than 20 percent CGR. Healthwarehouse.com is one online drug retailer attempting an online pharmacy nationwide (but has been going through some challenges.) Even if Amazon just stuck with generics and self-pay customers, it would potentially be a huge market opportunity for the online retailer.
If Amazon enters the market, patients and pharmacists alike will hope that it blows the industry wide open. Online shopping typically presents much more information to consumers, which is exactly what drugmakers will be worried about as a powerful new competitor waits in the wings of their lucrative business sector. – Drug 411
Price shopping prescriptions
What can consumers do now? “The safest thing to do is always know what the pricing is in the marketplace,” explains Mike Miele to CNN. Miele advises employers on benefits for consulting firm Arthur J.Gallagher, “There are literally thousands of generics that are below $10.”
One resource for consumers is to go to NADAC figures on Medicaid.gov for detail on the National Average Drug Acquisition costs for many drugs. GoodRx is one site to comparison shop prices, but not all pharmacies are compared. Many pharmacies like Costco provide pricing on their own websites.
After announcing the Amazon news, CNBC reports that shares of CVS and Walgreen’s Boots Alliance opened lower. But it will take Amazon a while to develop, test, and execute a pharmacy market plan. It is doing a deep dive with industry experts at the moment, and actual distribution may or may not happen or be a few years away.
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