Should You Pay Cash for Your Prescription?
Often it’s cheaper to pay in cash for a prescription than to go through insurance.
You arrive at the pharmacy counter, new prescription in hand – or already sent electronically to the drug store. Like most Americans, you have insurance that covers at least some of your drug costs. The pharmacy has your plan information. Now all that’s left to determine is the amount of your drug copay – what you’ll pay at the counter out of pocket to get your medication.
As it happens, the copay for this drug seems high. But you’re insured, and as patient advocates point out, it’s commonly (and understandably) assumed that a copay must be less than what you’d spend to just buy the drug outright in cash.
As it turns out, however, that’s not always the case.
Certainly if you have insurance, it’s always worth checking what your cost would be to get the drug through your health plan; for most, that remains the default. And, generally speaking, when you pay for a portion of medical services, procedures or medicines while using your plan, you may reach a point where what you’re responsible for paying out of pocket drops off – like when you meet your plan’s deductible.
But, experts say, there’s still good reason to compare your drug copay with that cash price, as well. That’s because often it’s cheaper to pay in cash for a prescription than to go through insurance, points out Gwendolyn Klein, co-founder and owner of Values Based Patient Advocates in Chantilly, Virginia.
The reasons for this vary. But one factor is competition that has squeezed margins – particularly on more commonly filled prescriptions, like blood pressure medicine and cholesterol-lowering drugs that have been on the market for longer. Retail stores use low drug prices to attract traffic, hoping to make more money on other purchases – like that 100-pack of toilet paper rolls at margin-squeezing giant Costco, says Brett Hagen, co-founder of Values Based Patient Advocates.
Klein and Hagen advocate taking advantage of the growing movement to improve drug pricing transparency online and checking out free-to-use websites like Blink Health and GoodRx. “What I do now is I check the cash price before I go and even get my prescription,” Klein says. “It’s usually really inexpensive.” If the price is lower than your copay, you can purchase the drug directly through Blink Health and pick it up at participating pharmacies, such as Wal-Mart, Kroger or Rite Aid; while GoodRx lists pharmacies in the area with the lowest price on the medication.
The Emergence of Copay ‘Clawbacks’
There’s another reason some pharmacists say consumers may be paying more for copays, in certain cases, than they would have in cash for the same drug: so-called copay “clawbacks.” Doug Hoey, CEO of the National Community Pharmacists Association, which represents the owners of more than 22,000 community pharmacies, says the association first started hearing from members about this four or five years ago. Essentially member pharmacy owners reported that consumers’ copays were higher than the cash price to buy a drug at that same pharmacy. “In essence, the consumer is asked to pay more – they overpay for their copay for their medicine,” Hoey explains. “The pharmacist is made, or forced, to collect that overpayment, and then at some later point the insurance company ‘claws back’ that excess payment that had been made by the consumer.”
Though the difference might be $5 or $10, it can climb to more than $20 and even over $100, according to some instances reported in an NBC News investigation into the practice.
At the center of it all were pharmacy benefit managers, which process billions of prescriptions annually. Specifically, pharmacists have fingered OptumRx and Catamaran, a PBM that was acquired by Optum in 2015: “Optum, and now they own Catamaran – those two PBMs then and now are the ones that we hear about the most engaging in this practice,” Hoey says.
By contrast, the two other largest PBMs, Express Scripts and CVS Caremark, have not been implicated in alleged copay clawbacks; and company representatives say they don’t support or plan to engage in the practice.
For its part, the health plan Cigna and its PBM, Optum, are being sued over the alleged practice in a proposed class action filed earlier this month in U.S. District Court in Connecticut. Another suit over alleged copay clawbacks filed against UnitedHealth Group, which owns Optum, and against Optum, was dismissed in December by the U.S. District Court in Minnesota. “We intend to refile,” says Craig Raabe, an attorney representing consumer plaintiffs in both suits.
Raabe says the practice of copay clawbacks is illegal because, like in the case of Cigna, plans are telling consumers that in no event would they pay more for the drug copay than they would purchasing the drug in cash at that same pharmacy.
Pharmacy owner members of NCPA have also reported to the association being subject to gag clauses that prohibited them from talking about the clawback arrangements, precluding them from proactively alerting consumers that they could get the drugs for less if they paid in cash rather than using their insurance plan.
“Concrete data shows our pharmacy programs help reduce health care costs,” responded Drew Krejci, a spokesperson for OptumRx, in an email. “Pharmacies should always charge the lowest amount in a person’s health plan and any assertion to the contrary by pharmacies is false.”
Krejci added that, ”We do not prohibit pharmacists from discussing the cash price of prescription drugs with our members and we encourage people to use our drug pricing tools to find the lowest costs for their prescription drugs.”
Cigna spokesperson Joe Mondy said that the insurer “is committed to offering customers and clients affordable solutions to support improved health while containing both drug and total medical costs. A pharmacy should charge Cigna customers the lowest price available,” Mondy asserted. “We encourage pharmacists to share all options with customers as they struggle to manage the rising costs of prescription drugs.”
More Reason to Check Prescription Drug Pricing
Increasingly, people with insurance are being asked to pay more out of pocket as part of a shift toward high-deductible plans and, in certain cases, skimpier coverage that save employers and planholders (sometimes) on insurance premiums.
“The growth of high-deductible plans has really opened the door for this type of behavior – for these consumer copay clawbacks,” Hoey says. “This technique probably would not have worked when there were flat copays. But with variable copays through high-deductible plans, it’s created even more opaqueness.” So neither consumers nor pharmacists know what the copay will be until the claim is processed.
But beyond the controversy surrounding copay clawbacks, because plans increasingly require consumers to pay more out of pocket, there’s reason for any consumer to take a close look at prescription costs, and shop around. Not being able to afford medications is a big reason, some patients don’t fill prescriptions And, experts say, the differences in pricing can add up.
