Prescription medications are expensive, and Americans take a lot of them—in fact, nearly half of U.S. adults take one prescription drug, according to the Centers for Disease Control and Prevention (CDC). The cost of that medication makes up about 11.6% of annual healthcare spending in the U.S.
We pay more for our prescriptions than many other countries, too. According to one study, prescription costs in the US average 2.56% higher than 32 other evaluated nations.
Whether you’re providing resources to your employees or looking on your own behalf, prescription costs can represent an enormous financial burden. As more Americans share the cost of healthcare through high-deductible health plans (HDHPs), it’s important that we understand what our medications are costing us—and how to ensure you and your people are getting the best price.
How prescription coverage works
So you visit the doctor, get some bloodwork, and are prescribed a new medication. The doctor automatically sends the prescription to your preferred pharmacy—they have it on file— and within an hour, the pharmacist calls to inform you that your new medication is ready to be picked up.
This process probably sounds routine, but it doesn’t necessarily ensure you’re getting the best available price. In fact, the copay might not even be clear until you arrive to pick up the medication.
Before we dig into savings strategies, it’s important to understand how medications are covered and paid for under most health insurance plans. Most employer-sponsored health insurance plans use a list called a formulary to determine what medications they will cover and how much of the cost they will pass along to you. A formulary is split into tiers, with the lowest tiers including the most inexpensive generic drugs. The highest tiers include the most expensive, and often rare, drugs. Not all health insurance tiers are the same, they vary by insurer and by the specific plan, and they can change from year to year.
If your plan includes a deductible, you might have to pay the full cost of the prescription until your deductible is met. If your plan includes a prescription copay, it might cost a lower amount that’s based on the medication’s tier. Copay amounts can vary depending on the tier in which a medication sits.
Most of us go straight from the doctor to our favorite pharmacy. But healthcare providers don’t necessarily have insight into a plan’s formulary, meaning they may prescribe a brand-name medication that’s more expensive than a generic alternative. The system is confusing, and finding medication savings can require research, coordinating with a pharmacist and healthcare provider, or even using a third-party tool. In other words, finding savings takes work.
Here are the strategies our healthcare concierge team uses to perform an Rx Savings Review for our members. Any one of them makes a great place to start looking for savings.
Our prescription savings strategies
Therapeutic alternatives – These are medications that rely on different chemical compounds to treat conditions and yield the same therapeutic effect. If a particular prescription drug therapy is expensive, a therapeutic alternative may exist at a lower price point. A prescribing doctor or your pharmacist can help with questions about therapeutic alternatives.
Generic alternatives – Generic drug substitutions use a different formulation of the same drug that was originally prescribed. Unlike therapeutic alternatives, generic medications are considered the same as the original prescription medication, and can often be filled by a pharmacist at a lower price. The RAND Corporation study found that for brand-name drugs, Americans pay 3.44% more than other developed nations. For generic drugs, though, we pay only 84% of what other nations do.
Manufacturer coupons – Many drugmakers offer coupons (often called a discount card or copay card) to reduce the out-of-pocket costs of their products. Drug companies typically offer rescription discount coupons for expensive, brand-name medications, such as insulin and immunosuppressant drugs. Offering coupons incentivizes patients to take these medications over generics. Because of that, many state and federal regulations govern copay cards and how they work with your insurance.
Prescription assistance – Like coupons, prescription assistance programs are run by drug manufacturers to offer free medication to people who can’t afford it. These are typically for those without health insurance, but those with insurance may qualify for certain programs if they are experiencing financial hardship or can prove their medication isn’t covered by their insurance.
Third-party savings programs – Enrolling in one of these programs can help find prescription savings for medications not covered by insurance. It’s also helpful for those enrolled in Medicare who may be ineligible for other programs, like manufacturer coupons.
Mail-order options – A health plan may offer mail-order pharmacy options that are managed through a Pharmacy Benefit Manager (PBM). Using a mail-order pharmacy through a health plan can help identify drugs with much lower copays. Prescriptions from a mail-order pharmacy are usually offered in 90-day supplies.
Pharmacy comparison – The pharmacy down the street may not offer the best price on prescription medications. With a little flexibility, it’s easy to uncover whether a Walgreens offers a better price than CVS, or that the opposite is true.
Dose optimization – Dose optimization typically involves working with a prescribing physician to condense several daily doses of a certain medication into an equivalent, once-daily dosage. It saves the most money when the cost of different doses is similar. Dose optimization requires working with a prescribing doctor.
An easier way to uncover savings
If prescription prices are a financial burden, prescription savings strategies can offer some relief. Between a medical provider, pharmacist, insurance provider, and any work done by a third-party service, the savings available can add up. HealthJoy members get free access to Rx Savings Review services, and the help of a healthcare concierge who can help them find pharmacy options, through the HealthJoy app. They can also access Medical Bill Review services and get help with prior authorizations, simplifying the process from start to finish.