Like millions of Americans, we are on a high deductible health plan with a health savings account. I went to pick up a prescription for one of our kids for Adderall, a very common ADHD medication. The pharmacist said, "you're getting the name brand, which costs $117.” I asked him to check on the generic version, and he came back and said, "Your insurance won't cover the generic version." I asked how much the generic would be if I bought it retail. He responded, "Generic will cost you $185 or you can pay $117 for the brand name through insurance." The generic drug would cost me over 60% more than the brand name drug!
The carrier and/or its pharmacy benefit manager is likely getting rewarded by the brand name manufacturer in exchange for forcing patients to buy the name brand drug. Brand name manufacturers have responded to the introduction of generics by negotiating rebates and other financial incentives for the health plans to steer members away from generics. In many, if not most cases, neither the employer nor the employees on the group health plan are getting a share of that windfall.
This has been going on for quite a while with some common brand name drugs as generics have come online to compete with them- https://www.nytimes.com/2017/08/06/health/prescription-drugs-brand-name-generic.html.
Since using insurance for a brand name and skipping insurance to pay retail for a generic weren't working for me, I decided to try a discount drug program. I went online to GoodRx.com, a popular discount drug program, and found that using their free drug card to purchase the prescription would save me half of what it would cost to use my health plan and 70% off of the retail price for the generic drug. When you use a discount drug card instead of your health plan to purchase a prescription drug, the expense doesn't count toward your health plan's deductible or out of pocket maximum. However, if you have a health savings account, you can use funds from that account to pay for the prescription drug free of tax.
Mid-sized and large employers are looking increasingly to self-funded strategies that allow them to negotiate transparency and cost savings in the management of pharmacy benefits through their health plan. In other words, they get to demand contractually that their people won't get fleeced at the pharmacy, and they get to share in any rebates that go to the pharmacy benefit manager.
In the small group and individual health insurance markets, employers and members don't have that ability. They are stuck taking what the insurer is offering or finding their own alternative.
I've been in this industry for nearly 20 years. I know how these systems work (and how they don't work), and it is still confusing, if not maddening, for me to experience it as a consumer. People think that having health insurance should ensure that they are getting the best discount possible for medicine and medical services. They certainly don't want to have to establish a parallel process just to verify that they aren't getting overcharged for things like prescription drugs. However, we are finding that if people want to be sure, this is indeed the type of thing they must do.
Fortunately, with the Internet at our fingertips and even phone apps for popular discount drug programs, it isn't hard to check on a drug cost and determine the best way to purchase it in a matter of a few minutes before paying at the pharmacy.
In addition to national discount drug programs, many chain stores like Walmart, Target, and HEB have generic drug programs that allow consumers to save money on the purchase of generic drugs. Again, the consumer won't use their health insurance card when purchasing the drug, and the cost won't count towards their health plan maximums. However, they can save money and still use health savings account funds to pay for the drug tax free if they’re enrolled on an H.S.A. eligible health plan or their flexible spending account dollars if they have a traditional health plan.
Is it a little ironic that your insurance advisor would tell you that not using your health insurance could be a better way to go for some prescription drugs? YES! However, as our health care systems and health insurance landscape have grown more and more complex, we find that our role as an advisor is more about minimizing cost and frustration for employers, employees and their families.
We wish you a safe, happy, and hassle-free holiday season!
- Cuatro Groos