Regular readers will recognize that this blog has discussed the tactics of the Pharmacy Benefit Managers at length. A PBM is essentially a middleman that extracts profits by controlling both sides of a transaction. The PBM industry spends most of its efforts marketing to payers. They market their services as helping to simplify the management of an employer’s drug benefit plan as well as helping to control costs. The latter claim is often disputed by pharmacists but that topic has been covered in detail previously on this blog.
But what if the PBM took this one step further? Instead of marketing to payers and plans, they marketed directly to consumers without insurance? This is exactly what has happened. In the pharmacy industry, these are what are known as discount cards. Discount cards have traditionally worked by using a technique known as a claw-back. The amount being paid by the patient includes a fee that the pharmacy must collect for the discount card. Most independent pharmacies include the adjudicated price on their receipt so the patient can readily see a claw-back. The receipt would show a copay of $18 and an adjudicated amount of $10. Most pharmacists would then discuss how discount cards work with the customer and offer alternatives that eliminate fees paid to a middleman.
One discount card, though, has taken this to the next level, allowing the patient to pre-pay for their prescriptions online. They then take their prepaid “prescription discount card” to the pharmacy who then processes the claim through the PBM. Then pharmacy is paid directly by the PBM with the patient having already paid the PBM.
Just like transactions being paid by an insurance company, this discount card model uses spread pricing. They still make money on every single prescription, but this time the fee is much less transparent. By having the patient pre-pay, they obscure their spread as the patient is unlikely to know what the pharmacy is being paid and the pharmacy does not know what the patient already paid.
It is rare that bringing a third party into a transaction will actually save money. For this reason, most pharmacists and pharmacy owners distain discount cards of any type. I would encourage anyone without insurance, or with prescriptions that are not covered by existing insurance, to speak with your pharmacist before using a discount card of any type. There are multiple options that may exist that could save you money without paying a hidden middleman’s fees. Sometimes is important that even the patient takes time to Make Every Encounter Count!