The cash price for a medication I take is around $1000 per month. My insurance provider does not believe that I am worth such an investment. (To be somewhat fair, my premiums, including the employer portion, is less than $1000 per month.)
To make the medication affordable, I went to the manufacturer’s website and got a coupon. The pharmacy replaces my insurance info with the info on the coupon and presto!, the price is $25.
I do not for one moment believe that the manufacturer is giving me this steep discount out of the kindness of their non-existent little hearts. I gave them pretty much no personal information to get the coupon. The only thing they know is that I take their medication, which they would already know, anyway. If they can sell the medicine for $25 and still recoup their costs and make a reasonable profit, then why aren’t they doing that?
I am not clear what you are saying: is the insurance company saying it won’t cover the drug at all–or is it saying that it will pay $750 and you need to do a large $250 copay (or other amounts adding up to $1000)?
Because they believe there are plenty of people who are willing and able to pay the rack rate, and aren’t desperate enough to try to find a way around paying the rack rate. If anyone questions them on the fact that their drug is so expensive, they can wave people off by showing how they will help people who are having difficulty paying.
Drugs generally don’t as cost much to make as they do to develop. Those development costs have to be recouped somehow, but they can get away with many people paying just above production costs if they set the rate people insensitive to price have to pay high enough
Because if they sell it to pharmacies for a price low enough for the pharmacy to sell it for $25 , then the pharmacy will only get $25 for my prescription even thought my insurance may have paid $700 when the price is set where the pharmacy sells it for $1000. It’s sort of thing that happens all the time when insurance or some other third party is paying for something - the price gets set above what any insurance will pay. It’s why doctors bill $185 for a visit and accept $75 as the total payment between insurance and the patient.
It might be a promotion where you can only use it for your first prescription. The pharmacy may have to enter your details when they cash the coupon. If you try to use a coupon another time, it might not work.
It may be a tactic where the company wants non-insured to use the drug as well. People with insurance won’t care about the price as long as their co-pay is low enough. They won’t seek out the coupon since it doesn’t matter for them. People without insurance will go price shopping. The company wants to make sure you use their drug rather than a cheaper alternative. Then if you get insurance in the future, you’ll just get the drug with your co-pay and not worry about the coupon price.
In my experience there are a few variations on the “pay a lot less than it appears you would have to” deals on medicine:
Discounts for people in hardship cases and/or uninsured. Fairly straightforward, if you need giga-expensive medicine and can’t afford it, there is often a program that will give it to you at a steep discount. This program is usually from the drug company, though it may be administered by a 3rd party.
Co-pay assist programs. These are when the copay with your insurance is still significant (see the 1k a month, insurance covers it, but you still have a $250 co-pay). In this case, the co-pay assist is basically like secondary insurance. There is often an annual limit on how much they will cover, like 2k a year in copay assist or something similar. Done by the drug manufacturer, also often administered by some 3rd party. I have used these quite a bit over the years, and other than an annual renewal to keep it active, they are great.
The little cards you often see available at pharmacies where you get a discount. I’m not 100% sure how these work, but I assume it’s a little like getting an AARP discount or something, where the pharmacy has negotiated to give a discount in exchange for the card company driving business their way.
I suspect it’s a lobbying tactic. If people are dying left right and center for lack of an affordable medication, then the risk is the government will step in and “make” it affordable. To forestall this, they have a way for people who cannot get an insurance company to pay for it, to still get the drug and thus stave off any bad publicity - perhaps even generate good publicity. Plus, expand the base of people using it so when the patent does eventually expire, those people will perhaps continue using their brand’s version, but at a lower competitive price.
meanwhile, as pointed out, the people whose insurance (or wallet) can afford the medication are adding to their profits, and repaying the substantial amounts spent to develop and test the drug. Not trying to defend the pharma industry, which combines effective lobbying with high profits, but any new drug takes a decade or more, development and then multiple clinical trials and FDA approval process - not cheap. Plus, I gather that the drug is typically patented early in the process so the window of rapacious opportunity between government approval and patent expiry is often not close to the full lifetime of a patent.
Yeah, the points about making the company look good are still valid. But more basically the manufacturer doing it because unlike say an iPhone the cost to develop the product is so much more in relation to the cost of producing a product. Maybe it costs the company $800 a month counting development costs and produce liability and company overhead. Plus the development costs of all other drugs that failed that have to be recovered. So they set a rack rate of $1000 for people that can and will pay it. But if the marginal cost to manufacture a months supply is $20, they still make money if they sell it to you at $25 if you can’t or won’t pay more for it.
Don’t forget advertising. A lot of the big players in the pharmaceutical industry (Pfizer, Eli Lilly, Novartis, etc.) spend more on advertising than they do on R&D.
The drug I am using is a medication to treat diabetes. It is advertised, but I haven’t seen it as much as Rybellsus or Trulicity.
Anyway, the terms of the deal require that I have commercial insurance. I cannot have government insurance – Medicare or Medicaid. I assume that those programs cover the drugs in a different way. In my case, my insurance is provided by the Teacher Retirement System of Texas and the premiums paid by me and TRS.
I have already shown the coupon, so I’ll be able to get the medication for $25/month for a year. If my doctor writes a long enough prescription, I may be able to get it for $25 for three months. We didn’t do that now because we’re still searching for the best treatment for my situation.
GoodRx and such sell your data. Remember, if you’re not paying for a product, it’s because you ARE the product. I’m not saying that people shouldn’t use GoodRx and similar programs, just be aware of what you’re providing to do so. I was thinking that maybe my $25 deal from the manufacturer may be something similar. After all, they make other stuff to treat diabetes and they now know that I’m in need of such things and that I have a relationship with them. “If you like our XYZ drug, you’ll LOVE this stuff!”
I had to check up on this to see if it is true. Not only is it true, it’s not even close. Some of the biggest names spend nearly double on marketing. Really puts the whole “drug prices must remain high or R&D will cease” lie to light.
Its a relatively new blood thinner that has the advantage that it requires less blood monitoring than the old medications. So her doctor specifically asked for that. Insurance will cover most of the cost of the medication (not sure of exact amount but it was multiple hundreds maybe over a thousand) but required a $120 copay for a one-month supply. Manufacturer discount card covers $110 of the copay reducing to $10.00.
The advantage to the manufacturer is clear. $120 is rather steep for the consumer and so many will decide its not worth it and go for the older version, which had a much lower Co-pay. if the consumer does that then the manufacturer loses out on the Insurance payment which is much larger than $100 co-pay that they agree to cover.
This is part of a strategic competition between insurance companies and pharmas. Insurance companies charge a high co-pay for certain expensive drugs, to encourage policyholders to choose cheaper ones. Pharmas give people discount cards so for the end user, it’s a more competitive price.
It’s a good example of price discrimination. Once the drug is researched and approved (a long expensive process with no guarantee of success), and mass production has begun, the cost of producing an individual dose is low (there are exception to this).
The company has a monopoly on the drug via its patent, and customers can’t resell the drug, so the company can charge high prices to those insurance companies that take it and to the government who can’t negotiate (that is changing though) and low prices to others.
From the company’s point of view, you paying $25 is better than you paying zero because you can’t afford it.