Approximately 44% of Americans aged 18-64 are either uninsured or on a high deductible health plan (HDHP).1 For this group, in particular, filling a prescription means facing the full – and often prohibitively high – “usual and customary” price of a drug at the pharmacy. Rising list prices have received a lot of media attention lately along with dangerous risks people may take when they can’t afford their medications, such as prescription abandonment, prescription rationing and all forms of medication nonadherence.
Drug Discount Card (DDC) marketers offer the uninsured and the underinsured easy access to substantial discounts on prescriptions that can provide immediate relief, but they can’t do it alone. DDC marketers must partner with a pharmacy benefit manager (PBM) to achieve competitive discounts and to process their claims. On the surface, it sounds simple: the DDCs that offer the best price win the customer. But dig deeper and it gets more complex. As a DDC marketer, your long-term success depends on the way your PBM partner works with you. Are they truly working for your best interests? Could they be competing with you? What, then, should a DDC marketer look for in a PBM to achieve success? Below, we outline four considerations to keep in mind to maximize success:
- Look for a high-volume PBM with extensive nationwide pharmacy networks that include all the major chains.
A PBM looks to negotiate the best discount from pharmacies. Some PBMs do a better job of this than others. The size of the PBM, its market share and how much business it will direct to the pharmacy are all important factors in the final discount. There are approximately 65,000 pharmacies in the US with several major national chains. Only those PBMs that contract with nearly all of them, including specialty pharmacies, can offer your customers the most competitive pricing choices.
Further, a PBM that is working with more pharmacies and at higher volumes can offer additional advantages for your business, like shorter payment cycles. Smaller PBMs have to invoice pharmacies and wait for remittance, meaning you only get paid after they get paid. If cash flow is important to you, look for a PBM partner that commits to weekly payment cycles.
- Choose a channel-agnostic PBM – one that is not affiliated in any way with a particular channel – to offer the most transparency.
Consumers are scrutinizing prescription costs more than ever and demanding real transparency. DDCs need to deliver as many options as possible through all of the available channels to support this demand. If your PBM is invested in the success of a chain of brick-and-mortar stores or a mail-order business, are you certain that your customers aren’t being steered toward those channels? To help ensure that your PBM prioritizes your best interests, work with a partner that is channel-agnostic, one whose focus is to provide the most competitive discounts to your customers as opposed to driving traffic into their channel.
- Look for a PBM that shares pricing data with you for full transparency.
Pass-through pricing is another side to the transparency issue that impacts your business results. Some PBMs will agree to pay you a set price per claim, but you don’t have line of sight into what they are keeping for themselves. In situations like these, you are at risk of getting short-changed financially—there is no way to really know. Full price transparency can be critical for your success in the competitive world of drug discount cards.
- Look for a PBM that does not offer its own branded DDC.
Many PBMs market their own branded DDCs. They offer the same discounts through the same channels to the same people you are trying to reach and are competing with you directly. In this scenario, the PBM knows exactly who your customers are and can market to them. Avoid paving the way for the competition to poach your customers. Your members are your members.
With SS&C Health’s DDC program, you and your members have immediate access to our 63,000-pharmacy nationwide network, highly competitive negotiated discounts, and a channel-agnostic business model. Because of our high claims volumes, our clients receive payments weekly. We share all of our pricing data with you for full transparency, and we do not market our own branded DDC, understanding that this is critical for your success in the competitive world of drug discount cards. Learn more about how our DDC Solution helps you win and keep more customers.
1 Becker’s Hospital Review: CDC Find 43.2 % of Americans have High deductible health plans: 4 additional stats, Feb 23, 2018. Accessed April 2, 2019; United States Census Bureau QuickFacts, accessed April 2, 2019
Written by Rod McKinney