Some drug retailers save 90% of the prices charged by major retailers like CVS.
The most aggressive retailer is Mark Cubans CostPlus [https://costplusdrugs.com/]. I compared a friend’s most expensive drug with a traditional retailer, CostPlus and a well-known discount service.
Generic Myfortic - 360 mg 60 caps.
· CVS charged $193.43,
· CostPlus charges $16.20,
· GoodRX provides a discount coupon for $41.74.
CostPlus was 8.4% of the CVS price. CostPlus makes it convenient by sending the prescription to your home. Most mail order prescription suppliers are more expensive than the in-store retailers.
CostPlus examples on 30 count generic drugs:
· Imatinib (Gleevec) for leukemia/cancers retail about $4,500 > $14.40 at Cost Plus.
· Pioglitazone HCl (Actos) for diabetes retail about $70-$90 > $6.60 at Cost Plus.
· Tenofovir Disoproxil Fumarate (Viread) for HIV and Hepatitis B retail about $554 > $18.30 at Cost Plus.
MANY DRUG DISTRIBUTION MIDDLEMEN
Mark Cuban’s price is 15% higher than his purchase price direct from the drug companies. CostPlus eliminates the middlemen between the drug manufacturer and the end consumer.
The major middlemen, in order of profit mark ups, are the pharmacy, the insurance company, the pharmacy benefits manager [PBM], and the wholesaler which markup the price a total of between 70 to 80%. Other intermediaries like benefits consultants have hidden commissions and fees that can raise the net markup higher.
GENERIC DRUGS ARE MORE PROFITABLE FOR MIDDLEMEN
Manufacturers make about three times the gross profits on branded vs. generic drugs. PBMs make four times as much on generic drugs compared to brands, while wholesalers make eleven times as much, and pharmacies almost twelve times as much.
Middlemen are monopolistic with three dominant drug wholesalers, three dominant PBM’s and handful of dominant pharmacy chains. CVS is so large and profitable it bought the health insurance company Aetna.
SELF INSURED EMPLOYER HEALTH PLANS CAN SAVE MONEY
Generic drug prescriptions like those CostPlus sells are typically 50 to 60% of employer health plan drug cost. In addition, there is critical need to manage the more expensive drugs. NBC News reported that 9% of drugs cost $150,000 or more a year in 2008. In 2021, 47% of drugs hit that cost threshold.
Self-insured employers can save significant money by using emerging cost cutting services and eliminating their expensive PBM. A growing number of employers use 3 or more specialized services to save as much 30% of their spending on drugs. Like
CostPlus, some services get the best price on drugs. Others work on monitoring the use of drugs both for usefulness to the employee and eliminating expensive choices which becomes critical with the very expensive drug protocols.
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