How Retirees Can Negotiate Drug Prices
A Squared Away reader wrote recently that he and his wife saved $2,400 a year by paying cash for their medications.
When a pharmacy sells a prescription drug to a customer, the health insurer reimburses the pharmacy at a negotiated rate that covers its cost for the drug, its dispensing fees, and any additional markup. It’s often the case that a patient’s copayment exceeds the pharmacy’s reimbursement, resulting in an overcharge in the copayment. More than one in four copayments were overcharges in a March analysis in the Journal of the American Medical Association of some 4,000 outpatient drugs and
9 million insurance claims by people of all ages.
We asked Mohamed A. Jalloh in Napa, California, to guide consumers on how to reduce their costs. He is a pharmacist, assistant professor at the Touro University California College of Pharmacy, and a spokesman for the American Pharmacists Association.
Question: How can retirees access their option to pay a cash price for a prescription if it is lower than their Part D or Medicare Advantage plan copayment?
Jalloh: The big picture is that elderly patients should work with a pharmacist to see if they can get a better deal. If you process a prescription through your insurance – whether under an employer’s health insurance or Medicare drug coverage – the price may be higher than paying straight cash for the medication. Anyone can do this. But I imagine it helps seniors the most because they’re the ones taking the most medications.
The key is to ask the pharmacist to go over your medications with you. Do a medication check-up once a year. That’s the best time to see if a pharmacist can get a better deal for you.
Q. Is it common practice to negotiate a cash price?
Jalloh: I think that people do not know about this option and would really appreciate learning about it. It’s also important to remember that, in most cases, people are still going to get a better deal with insurance by paying, say, a $5 or $10 drug copay.
But if patients want to investigate, the most likely options are meds that have been around a long time like blood pressure drugs, blood thinners, cholesterol medications, and ibuprofen. These older drugs have generics, and there’s a better chance of getting a good cash price.
Q: Retirees must explicitly ask the pharmacist if the cash price is lower. But my research shows that 26 states – including Arizona, Florida, and Texas – require that pharmacists volunteer this information. What’s going on here?
Jalloh: Typically the pharmacy company, say CVS or Walgreens, will clarify to their pharmacists that they should not communicate this information unless the patient asks. However, some states have removed this gag order so the pharmacist will volunteer it. I recommend that the patient ask this question: What can I do to get the best price? Another way to ask is: Can you give me comparisons for how much I would pay for medications using insurance and how much would I pay in cash, without using my insurance?
Q: Why are prescriptions sometimes cheaper when seniors pay with cash?
Jalloh: The insurance company and the pharmacy company are separate entities, and each one is paying and charging different prices for the same medications. Insurance companies set the patients’ copayments, but the price the pharmacy pays to purchase the medication can be lower depending on the insurance plan.
Q: When is a lower cash price not possible?
Jalloh: It’s possible except in cases where people do not pay anything for a prescription processed through insurance, or if they hit the prescription drug deductible on their insurance.
Q: Is this option available at all pharmacies?
Jalloh: Yes. Anyone who processes your drug benefit under your health insurance can do these price comparisons. Based on the pharmacist’s costs and pricing, I’m assuming they make some profit as well when they sell a drug for cash. Keep in mind that the same medication can be a different cash price depending on the pharmacy you go to.
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