PBMs skip insurers in new direct-to-consumer deals
In the quest to help patients lower their prescription drug costs and deal with high-deductible health plans, pharmacy benefit managers and tech startups are elbowing out insurers. They’re encouraging patients to trade their insurance cards for discount cards when they reach the pharmacy register.
Startups such as Blink Health and RefillWise are offering discounts to consumers who don’t use their prescription coverage. Meanwhile, pharmacy benefit managers, along with tech firm Castlight Health have built an app that offers drug price transparency to physicians and patients.
They’re part of a cottage industry that’s sprung up to help consumers and employers rein in prescription drug costs. The programs are also a departure for PBMs, which have mostly been serving as third-party administrators of prescription drug coverage for insurers and employers. More importantly, those moves mean that payers and the coverage they provide are being challenged in the drug-pricing paradigm.
The companies hope to offer relief to Americans who are underinsured or on high-deductible health plans. But the programs don’t contribute to a patient’s deductible, so they risk higher costs later on.
Woonsocket, R.I.-based CVS Health is launching ReducedRx, a discount card offered through the company’s PBM business, CVS Caremark. For now, discounts are only being offered on certain brands of Novo Nordisk insulin, which patients can get for $25 per 10 milliliter vial, but the card can be used at over 67,000 pharmacies in the PBM’s network, including CVS pharmacy locations. The median retail price of these vials of insulin is around $165, according to the American Diabetes Association.
ExpressScripts, a major PBM based in St. Louis, also recently launched an insulin discount program, in partnership with drugmaker Eli Lilly and Co. and Blink Health, a New York-based startup. Patients can pay the startup a discounted price for drugs through an online platform and pick up the prescription at a participating pharmacy. The patient presents the Blink card as its payer instead of an insurance card.
The ExpressScripts partnership offers up to 40% off the retail price of most insulin products made by Lilly. It’s the first time that Blink has offered discounts on branded medicines. The company has since launched a direct deal with Atlanta-based Arbor Pharmaceuticals on brand-name highblood-pressure medications. Lilly provides rebates for the insulin.
CVS spokeswoman Erin Britt said in a statement that the ReducedRx program—which the company plans to expand to other medications—is aimed at helping consumers with high out-of-pocket costs.
ExpressScripts said in a statement that being an independent PBM— rather than being attached to an insurer or pharmacy—gives it “the scale, flexibility and expertise to create innovative solutions” that bring down the cost of medicine. “We’re continually evaluating solutions that leverage our many capabilities and put medicine within reach of uninsured and underinsured patients,” the company said.
Several payers are trying to make it easier to provide affordable insulin to the country’s 29.1 million diabetes sufferers, including the 1.25 million with Type 1 diabetes, who require regular insulin treatment unlike Type 2. Adhering to an insulin regimen prevents costly emergency visits if a patient’s blood sugar drops or rises.
UnitedHealth Group, which includes the industry’s other major PBM, OptumRx, and insurer UnitedHealthcare, didn’t respond to a request for comment on this story.
CVS has taken several steps to draw savvy customers into their drugstores. It recently announced it would offer the generic version of Adrenaclick, a less-prescribed EpiPen alternative, to patients for $109.99, regardless of insurance and before a possible $100off manufacturer coupon.
Keith Jacobs, president of tech firm Luscinia Health, which also offers discount prescription cards, said, CVS “probably saw a really amazing reaction to their Adrenaclick price and said ‘Let’s pick another area that’s constantly frustrating consumers . . . and maybe we’ll get more people in our stores.’ ”
Jacobs believes discount cards and other alternatives will drive consumers away from using their prescription coverage, especially those with highdeductible plans. An unscientific survey of a few hundred members in Luscinia’s RefillWise card program found
“The healthcare supply chain is very complicated, and it’s wild that in the USA you can pay hundreds of dollars a month for your health insurance and assume you’re getting the lowest negotiated price, even though that’s not the case.”
MATTHEW CHAIKEN Co-founder Blink Health
that 70% had some form of health insurance. The startup’s leaders were stunned—they expected that the overwhelming majority of the company’s 1 million users would be uninsured.
Americans buying their own coverage and doctors prescribing drugs should educate themselves on the true costs of medication, said Matthew Chaiken, a Blink co-founder.
“The healthcare supply chain is very complicated, and it’s wild that in the USA you can pay hundreds of dollars a month for your health insurance and assume you’re getting the lowest negotiated price, even though that’s not the case,” Chaiken said.
PBMs have come under fire for benefiting from soaring drug prices, because their revenue is most often based on the amount of transaction revenue they handle. Some also believe that the added player in the supply chain—in addition to the insurer, drug distributor and pharmacy, among other parties—contributes to higher costs. These deals may be a response to that backlash.
Chaiken believes that drug-pricing strategies and the current structure of prescription coverage will need to evolve if it intends to keep up with innovators in the space. “The current structure of the system is not sustainable,” he said.
Discount programs may help patients save money on prescription costs, but they allow overall healthcare costs to continue to skyrocket because they’re not addressing the underlying problem, said Caitlin Morris, director of affordability initiatives at consumer advocacy group Families USA, which is calling for federal action on the issue.
Morris worries that discount programs may hurt patients by pushing them away from prescription coverage that could save them more money in the long term if they reach their deductible.
“There may be some cases where uninsured patients or patients with higher cost-sharing requirements might find this beneficial. But in the long run, I don’t think this helps anybody if we can’t find a more systematic solution,” Morris said.