Cash prices are becoming the increasing popular choice for customers picking up their medications at pharmacies. Contrary to popular belief, paying cash prices may actually be cheaper than co-paying with your insurance.
First off let’s discuss the differences between insurance pricing and cash prices.
What are cash prices? This is where you pay for the medication but without using your insurance. Instead, you pay a set cost that includes how much the pharmacy paid for the medication through a wholesaler, pharmacy dispensing fees and a some pharmacy dependent mark-up so the pharmacy earns money as well.
What is included in insurance pricing? Well insurance prices are determined by the insurance company and the pharmacy benefit manager (PBM) hired to negotiate better prices. Insurance prices for medications include a mark-up in order to pay PBMs for their services.
Because cash prices are usually offered for generic medications and the prices can be more competitive than what insurance copays offer. A lesser known fact is that the insurance prices can be inflated due to PBM’s overcomplicated negotiations which include administrative fees as well as unethical pricing strategies, or spread pricing.
Cash prices may not only be better for consumers but also for pharmacies. Prescription medications costs have been on the rise yet pharmacy profit margins have continued to decrease. Cash prices might be the way for pharmacies to improve their bottom line and for Americans to be able to afford their medications.
Mark Cuban has recently entered the pharmacy industry with the Mark Cuban Cost Plus Drug Company (MCCPDC). MCCPDC is an online pharmacy that offers significant discounts on generic medications on over 700 medications.
The pharmacy is working to add new drugs but their current stock includes medications for those living with cancer, diabetes, heart conditions or gastrointestinal conditions. MCCPDC cash prices are also featured on eNavvi so doctors and patients alike can compare cash prices to insurance copays.
A recent study published in the Annals of Internal Medicine, showed that Medicare could have saved $3.6 billion on 90-day supplies generic medication if it had purchased the generic drugs through MCCPDC. MCCPDC would have been able to supply 77 out of the 89 generic medications. However, instead Medicare went through the existing generic pharmaceutical distribution and reimbursement system.
So while cash price pharmacy seem to be the better option, 91% of Americans are still filling their prescriptions through insurances according to Avalere Health.
Are cash price pharmacies the solution to rising medication costs or just the better option now on the road to more affordable medication?
