How to Beat the Prescription Drug Discount Card Game

by Todd Fisher, R.Ph,, Director of Product Management for Pricing Solutions

The most expensive medication is the one the patient doesn’t take.

As pharmacists, we hate to see patients struggle to pay for their prescription medications or abandon a first fill because they can’t afford it. Unfortunately, nearly one in four Americans say it is difficult to afford their prescription medications.

Enter prescription discount cards. The popularity of these cards is sky-high, with tens of millions of Americans using them every day to shop on price and take advantage of lower cost options to obtain their medications. Prescription discount cards are great for pharmacy patients, providing them easy access to lower cost options for medications. But from a business perspective? It’s a little more challenging.

The prescription discount card dilemma

While you are probably all too familiar with the impact that prescription discount cards have on your bottom line, let’s look at a simple example to illustrate the point:

  • $17: acquisition cost for drug X
  • $30: pharmacy cash price (U&C) for drug X
  • $25: amount collected from patient using a prescription discount card
  • $20: net reimbursement to pharmacy after prescription discount card fees
  • $3: net margin on drug X

You shouldn’t have to lose to help patients save. So how can you win against prescription discount cards? By keeping your usual and customary (U&C) prices market-competitive.

The sweet spot: optimized U&C pricing

U&C pricing is a delicate balancing act – you need a price that’s market-competitive for cash-paying customers, but you don’t want to lose money on third-party reimbursements with a price that’s too low.

What if you could find that sweet spot, where your U&C price was the same or close to the prescription discount card price and you were maximizing your third-party reimbursements? You could offer patients the price they want without losing margin to a prescription discount card. Let’s look at the math again in this context:

  • $17: acquisition cost for drug X
  • $25: pharmacy cash price (U&C) for drug X
  • $25: prescription discount card price for drug X
  • $25: amount collected from patient for pharmacy cash price (U&C)
  • $8: net margin on drug X

Let technology do the work for you

Manually tracking prescription discount cards, changes in acquisition costs, local market prices and third-party maximum reimbursements is a losing battle. There are too many complexities and changing variables for anyone to be successful.

Technology can tackle the seemingly insurmountable challenge for you, by leveraging market intelligence to constantly monitor and adjust your U&C prices based on changing market conditions.

When looking for the right technology, there are a few important considerations. Be wary of solutions that simply add a percentage on top of your acquisition costs. Even if the technology monitors changing acquisition costs, adding a percentage on top of the cost will rarely result in an optimized and competitive price.

The right technology should take into account multiple data sources to make informed decisions on optimized prices. It should monitor all prescription reimbursements and acquisition costs, understand cash prices in your local market and identify non-optimized insurance payments. Any necessary adjustments to keep your U&C prices competitive yet profitable should be automatically updated within your pharmacy management system.

Next Steps

I’d be willing to bet that none of you became pharmacists to spend your time on price research. Let technology manage this part of your business for you, while you focus on growing your business and bringing value to your patients through high-value activities like clinical services.

Getting out of the prescription discount card game with optimized pricing is a winning proposition for everyone.

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