It isn’t breaking news to say that medicine is expensive. In fact, pharmaceuticals are so expensive that 27 percent of Americans don’t fill their prescriptions due to cost. Yet in many cases, patients could have filled their prescriptions for less than they were told. Policymakers often talk about drug price transparency and reporting requirements, but real transparency means telling patients when they have a cheaper option to fill the same prescription. Without that, patients are left in the dark, not knowing when they are overpaying for their medicine.
State-level pharmaceutical transparency laws often require drug manufacturers to report the acquisition cost of their products to Prescription Drug Affordability Boards. While that information may help insurance companies and regulators, it is irrelevant to patients. Patients don’t deal with acquisition costs; they deal with retail prices and co-pays.
Even when acquisition cost reporting is made public, it is fundamentally flawed. Regulators and insurers don’t know the real acquisition cost of a drug because reporting requirements fail to account for pharmacy benefit managers’ (PBM) tactics. PBMs have been known to collect rebates on the reported acquisition cost and pocket the differences instead of passing savings on to pharmacies or patients.
So how does a patient know they are getting the best price? In most states, they don’t.
Most states prohibit PBM gag clauses that prevent pharmacies from informing patients about lower-cost drug options. This is an important first step, but it is passive. It merely permits a pharmacy to share pricing information with a patient; there is no requirement to inform the patient. Only a few states mandate pharmacists inform patients when a lower cost generic is available. Even fewer still require pharmacists to tell patients when paying cash is cheaper than using their insurance.
It may sound implausible that any medicine would cost less than the insurance co-pay, but one study found that in nearly a quarter of cases the cash price was cheaper, frequently for generic medicines. Many patients assume—quite reasonably—that their insurance wouldn’t make them pay $285 for a $40 medicine, but that assumption is wrong.
A handful of states have taken proactive steps. Florida, Illinois, Maryland, Texas, and Vermont each require that patients be informed at the point of sale when lower-cost generic drugs are available. The details vary. Texas and Vermont include interchangeable biological products. Florida and Illinois require pharmacists to inform customers if the retail cash price is less than the insurance co-pay. Maryland simply requires the lowest price option to be presented to the patient, whether it is a generic medicine or a cash price.
Other states should take a lesson from these examples. Patients usually don’t know if a generic version of their prescription is available, let alone its price. Prescription medicine prices are not like band-aids, patients can’t look at multiple brands and prices on a shelf and compare them. Prices for prescription medicine are buried under layers of negotiations between insurance, PBMs, and pharmacies. Lawmakers should require that patients are informed of the lowest price every time they fill a prescription.
