Drug Discount Cards Costing Private Insurers

Pharmaceutical companies often offer drug discount cards to help defray out-of-pocket costs for patients’ prescription drugs. The drugs are marketed by a range of entities, Including: PBMs, retailers, drug manufacturers, membership organization, and independent companies.

Consumer use of drug discount programs has shown rapid growth since launch for uninsured or patients considered underinsured. The main catalyst behind card growth was a bill passed by the Senate in September 2018 that ended gag clauses that barred pharmacists from telling consumers when it would cost less to pay cash for a prescription than to pay the copayment under their health plan.

Initially, industry observers questioned whether these cards really save customers money, but the companies that market them advertise their value, transparency, and ability to improve. The disadvantage of discount drug card are that their expenses do not count toward a patient’s deductible or out-of-pocket maximums and cannot be combined with insurance.

Recently, a new study out of Canada found that such discounts end up costing private insurers. Looking at nearly 3 million prescriptions for 89 different medications, researchers found that discount cards cost private insurance companies 46% more in health care costs compared to similar generic prescriptions. At the same time, spending by public insurance — which Canada offers to all its citizens — was only 1.3% higher than for generic drugs, and patients saved about 7% per brand name, or CAD $3.49, per prescription by using the discount cards.

Takeaway: Industry stakeholders compete to develop programs and tools to make medications more affordable and accessible.