Quick quiz: Where is the cheapest gas in your neighborhood? Like most Americans, I can easily come up with an answer – it’s an independently owned station about a mile away where the price drops 10 cents a gallon after 9 p.m.
And yes, sometimes I’ll take an evening drive to take advantage of the savings. Next question: Which pharmacy has the cheapest blood pressure medications in your neighborhood? Most likely, you have no idea, and neither do I. That’s because there is no price transparency for prescription drugs, and with no transparency, how can we possibly tackle the affordability crisis?
The price of a gallon of gas is a very common topic everywhere in America today. Changes caused by weather, refinery issues, cost of a barrel of oil are all broadcast on the news, sometimes even as headlines, when prices fluctuate by 10 percent. Gas prices are the poster child for price transparency. Importantly, this transparency leads to competition among gas stations. Very often, when a station lowers its prices, the one across the street must do the same to keep its customers.
But what if gas prices were as opaque as medication prices? If so, you would only discover the price after you had filled up your car, and you would be expected to pay whatever it is. The gas station across the street (where you’ve never gone), might sell gas for half of that price. And what if premium gas was 10 times the price of regular gas – but since you always buy premium, you simply didn’t know that?
One reason for the opacity has been that in the past, consumers paid the same copay regardless of the retail price of the medication. But this arbitrary variability in prices has long inflated costs for health insurers, who passed them on to consumers in the form of higher premiums. Now consumers feel the pain of these wide price disparities even more acutely, through deductibles and coinsurance that lay bare the retail price, only after the prescription has been written. At this point the consumer has just two choices—pay a price that may be much more than the same medication at a different pharmacy, or abandon the prescription, risking their long-term health.
Drug prices at the point of care
Consumers—and their doctors—need better options to ensure that they and their health insurers are paying the lowest prices on prescription drugs, so they can take their medications as prescribed. Technology solutions that reveal real-time drug prices at local pharmacies, at the point of care, during a patient appointment, are a good first step.
Americans spent more on prescription drugs (over $379 billion in 2016, according to the Kaiser Family Foundation) as they did on gas (about $360 billion In 2016, according to the U.S. Energy Administration). Yet the largest sector, prescription medications, is shrouded in mystery and wide price variation while the other benefits from transparency and competition to help keep prices affordable.
While wholesale clubs like Costco may offer a discount on gas versus the big chains, it’s pocket change compared to the savings consumers and insurers could be reaping on medicines, if they know where to look.
Claritin, which is now sold over the counter, currently retails for $22.37 at a big pharmacy chain, while at wholesale clubs, a generic medication with the same ingredient is available for $1.58 or less, which is 7 PERCENT of the over-the-counter Claritin price.
The price of gas is something we all care about because when fuel prices become too high, it puts a drag on the whole economy, increasing prices for everything from produce delivered by truck, to plane tickets for a vacation. The same is true of prescription drugs. Healthcare now accounts for one-sixth of the U.S. GDP, constraining our ability to spend taxpayer money on other priorities such as education or infrastructure. In the private sector, making millions of medication decisions with no cost information means we're spending more for medications than we need to. Ultimately, where does that money come from? It comes from the employer, so they have less money available for raises or other benefits.
What does this all mean? It means we all need to shine a bright light on the prices of medication to make more informed decisions that will have a direct effect on our health outcomes. We need to insist on knowing what the price of our medications are, right when they are being written and before they are sent to the pharmacy to be filled. And we need to be able to do what we do with our gas purchases – we need to be able to, in consultation with our physicians, factor in the cost and affordability of our medications as part of our overall treatment plan.
Stanley Crane is chief technology officer with InteliSys Health. Prior to InteliSys, Mr. Crane most recently served as the chief innovation officer of Allscripts, a $2.3 billion provider of electronic health records (EHR) and other health IT solutions for over 180,000 physicians and 2,500 hospitals.
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