Online direct-to consumer outlets don’t lower out-of-pocket costs for most with insurance
July 8, 2024
Drug prices continue to drive a substantial portion of medical inflation, and patients can now purchase prescription drugs from retail outlets, including Walmart, Amazon, and Mark Cuban Cost Plus Drugs (MCCPD), which offer lower total prices for many generic drugs. A previous study showed that generic drugs that were most expensive were least likely to be available through these direct-to-consumer retail outlets.
Research published this month in JAMA Health Forum examined the potential out-of-pocket impact for employees who chose to bypass their insurance benefit to purchase medications through MCCPD. This retailer sells medications for a 15% markup plus the cost of shipping, a more transparent pricing system than was previously available through traditional pharmacy benefit managers, although many are now emulating this pricing approach.
The researchers compared MCCPD prices with those actually paid for 124 generic medications based on the 2019 Medical Expenditure Panel Survey (MEPS).
The results are disappointing.
Only 7.1% of those with private insurance had lower out-of-pocket costs than if they had filled their prescriptions through their health insurance. Estimated savings per prescription, including shipping, were $3.69. Only about a quarter (28.4%) of those who had cost savings achieved cost savings of over $10.
Implications for employers:
This research focused only on out-of-pocket costs for employees who essentially waived their insurance benefit. Total cost of drug acquisition might have been lower, but the MEPS survey does not gather total prescription costs.
The DTC outlets are currently mostly focused on less expensive generics, while medical inflation is driven by branded pharmaceuticals and expensive generic drugs with a single or few manufacturers
The transparent pricing of MCCPD has already influenced PBMs to change their pricing methodology. The DTC outlets could drive more savings if they are able to move into higher priced generics and brand name medications.
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Illustration by Dall-E