Prescription drug prices are higher than they should be for many patients because of certain practices of pharmacy benefit managers.

For example, PBMs make money by charging health plans considerably more for a drug than they pay pharmacies for the same medication. As a result of this “ingredient spread,” the drug goes into a higher price tier, obligating plan members to pay their respective copayment and, in some instances, the result is a higher copayment for that medication. In many cases, the copayment is more than the cash price at the pharmacy—but most patients don’t know that.

In addition, PBMs and health plans “claw back” the difference between the patient copayment and the amount they pay the pharmacy for the medication. Claw-backs have even been attributed to PBMs like OptumRx, which is owned by United Healthcare, one of the largest health insurers. Some payer-owned PBMs also profit from the ingredient spread, which adds to the insurer’s bottom line.

Federal and state legislators have tried to force PBMs to make public their maximum allowed cost (MAC) lists for generic drugs, which they use to extract low prices from pharmacies, and get higher payments from health plans and employers. But most of these efforts have not borne fruit. A House bill would require Medicare drug plans and PBMs that contract with federal employee health plans to disclose their standards for reimbursing pharmacies, including MACs, but it has been bottled up in committee for a year. And of the 15 states in which bills requiring PBM transparency about drug pricing have been introduced, only three states—Delaware, Maine and Missouri—have passed such legislation.

Bloomberg file photo

However, there’s a technological solution that can enable physicians to help patients lower their drug costs by giving them better information.

A drug pricing comparison tool could be integrated into the e-prescribing modules of EHRs. Using real-time pricing data from pharmacies, the software could show the cost of a drug at the closest pharmacies to the doctor’s office or the patient’s home or workplace.

The solution could also use the health insurance information in the EHR to analyze each patient’s drug coverage. By searching health plan databases, the application could determine a patient’s out-of-pocket cost after factoring in deductibles, copayments and other factors. If the patient had to pay the full cost—either because of their coverage or because they were uninsured—the software would show the cash price of the medication. It would also indicate whether that price was higher or lower than the copayment under the patient’s plan.

In the final step in the e-prescribing workflow, the prescriber asks patients where they’d like their prescriptions sent or, if they’d been to the office before, whether they’d like to have the prescription transmitted to the same pharmacy they used before. With the information from the drug pricing comparison tool in hand, the doctor can show patients where they’d be able to find the medication for the lowest out-of-pocket cost and ask whether they wanted the prescription to be sent to that pharmacy.

The first time a doctor discusses this with a patient, the physician probably would have to take a little time to explain where the data came from. But after patients are used to the process, it would add only a few seconds to the amount of time required to write and send an e-prescription. And it would save time compared with the current process—which, in many cases means some patients go to the pharmacy, find they can’t afford their medication, and call or have the pharmacist call the doctor to request a substitute.

If a drug pricing comparison solution were available in their e-prescribing workflow, doctors would likely accept it fairly quickly. Not only would the comparative pricing information please patients, but they’d be more likely to pick up their prescriptions if the drugs were priced affordably. That would increase patient compliance and adherence with their prescriptions, which would improve outcomes and please physicians.

Moreover, if patients took their meds and controlled their chronic conditions better, doctors would attain higher quality scores, which could increase their incomes from value-based plans.

There are no serious technological barriers to such a solution. Cost data from pharmacies and drug coverage data from health plans are available, and the software could easily be integrated into the e-prescribing modules used in EHRs. Also, because the solution would be highly automated, very little training would be required for physicians and other prescribers to use it.

PBMs would not be happy about it, however. If physicians used a drug pricing comparison tool to send their prescriptions to the pharmacies with the lowest prices and to inform patients when cash prices were lower than their copays, much of the PBMs’ profit margins would disappear. In addition, if the chain pharmacies had to compete honestly with independent pharmacies on price, the big chains like CVS and Walgreens would have to reduce their prices, which would be good for patients and payers.

It’s time the nation did something about the crazy-quilt drug pricing system that penalizes consumers with higher prices . Whether or not the government acts, technology can provide relief from this dilemma.

Register or login for access to this item and much more

All Health Data Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access