Amazon Pharmacy automates discounts to help insulin patients get pledged prices
reuters.com
reuters.com
Amazon’s GoodRX-style discount cards gets around this by basically charging a spread over the reimbursement and kicking back some portion of the spread to the PBMs. By making the price an “Automated Discount” to some number between the U&C price and the reimbursement price, Amazon can charge less without impacting their reimbursement rates while paying the PBMs off.
This is a huge simplification of the US’s broken pharmaceutical system, obviously. One example of the nuances here is that Amazon is probably not able to set the price of the discounted drug.
Some reading: https://www.drugchannels.net/2020/08/how-goodrx-profits-from...
UHC has OptumRX, Elevance Health has Carelon, CVS has Caremark, Cigna has Express Scripts, Humana has Humana Pharmacy Solutions, etc.
The biggest PBM not owned by MCOs is probably Prime Therapeutics, and they are hired by all the smaller BCBS plans that are not big enough to operate their own PBM, I presume.
For example
https://www.reddit.com/r/pharmacy/comments/33ac79/what_is_th...
But you can ignore a lot of the complexity these days due to consolidation. What used to be a health insurance company selling insurance for medical procedures only, and outsourcing the task of of evaluating coverage and negotiating prices for medicines to a third party known as pharmacy benefit managers, PBMs, is many times no longer outsourced.
Hence the term "managed care organization" (MCO) to supplant "health insurance company". Because now, the same business that sells the insurance can also employ the pharmacist, negotiate pricing for medical procedures and medicines, and employ the doctor providing the healthcare in some cases.
From a patient perspective, you and/or your employer pay the MCO, the MCO pays the doctor and/or pharmacist if the service/medicine is covered, and you pay the deductible/copay and this counts towards your out of pocket maximum.
Kaiser Permanente is an MCO that owns healthcare delivery from hospital to doctors to pharmacies. Some MCOs own more of the healthcare chain than others, and on the other side, you have hospital and doctor groups consolidating to be able to negotiate more favorable terms with increasingly larger MCOs.
The pharmacy pays the medicine distributor (such as Cardinal or McKesson or Amerisource Bergen), and the medicine distributor pays the medicine manufacturer (Pfizer, Merck, NovoNordisk, etc).
Most pharmacies themselves are owned by huge entities. Such as the largest retail pharmacy, CVS, which itself is an MCO. Next up is probably Walmart, Kroger, Costco, Albertsons, and then you have the last 2 big standalone retail pharmacies, Walgreens and Riteaid.
Looking at market capitalization graphs for Walgreens and Riteaid will inform you of how "up or out" the business is.
I don't think Amazon is "making" the price to some number. It's just applying the manufacturer discount automatically
Dad would have had to pay about $40K for Esbriet (for IPF a lung disease), and $1,700 per dose once every two weeks for Humira. And other drugs too like morphine, prednisone, laxatives and so on. But basically it ended up being almost $0.
Doctors do and can help a lot with drug costs. At least here in Canada the US who knows doctors probably get more in drug sales than anything.
Just like there should not be an expectation for the doctor knowing and telling you there is a coupon for vegetables at the grocery store if they tell you to eat more vegetables. If the doctor does know it, that is a bonus.
If a doctor in the US wants to be great at their job, they can’t ignore the financial component of their work — obviously some exceptions here like the doctors who work fee-for-service on the rich.
If a doctor recommends a treatment that the patient can't afford, and the patient doesn't discover that until days later at the pharmacy, that likely results in wasted time for all involved. The patient has to meet with the doctor again to discuss cheaper alternatives. Or forgo treatment, and risk more significant health problems, which lead to more cost in the future.
My dermatologist almost always discusses the costs of treatments. One example - a topical cream is available as name-brand or generic. The generic is formulated at a higher strength but costs less. So, I can pay more for a gentler, slower treatment. Or save money, but get a harsher treatment. Both work fine, but after selecting the harsh generic once, I won't do that again - it works faster, but the side-effects were miserable.
If the patient has a weird formulary or a high deductible, that's on them to understand.
As it turned out, my insurance wouldn't cover it at all, because they wanted me to try a cheaper, older medicine that had a much worse list of potential side effects.
If it hadn't been for my doctor, I wouldn't have known about the aid program or to enroll in it (technically, it was through a separate, non-profit legal entity, but it still has the manufacturs name in it).
The best doctors understand that a patient is an entire person, not just some specific problem or disease. Sometimes that means considering factors in their life other than the obvious direct medical causes of their problems. Sometimes that might include the availability of treatments, based on cost or location.
https://en.wikipedia.org/wiki/H._Jack_Geiger
https://www.nytimes.com/2020/12/28/health/h-jack-geiger-dead...
> Sometimes that might include the availability of treatments
this is about coupons. your doctor won't help you write your resume, even if they could and it would help you afford medicine in the future. That isn't their domain.
Doctors are specialists.
Geiger believed that the greatest threat to public health of his day was nuclear war, so he founded an organization (Physicians for Social Responsibility) to try to stop it, because he thought that would be more effective than waiting for the bombs to fall and trying to treat the victims.
You can disagree with his assessment, or the efficacy of his methods, but it's pretty unfair to dismiss them as "nonsense".
not exactly the same as founding an ethics foundation in their own field
> who realize that the domain of "health" is broad and encompasses things that aren't germs.
what things? mental health? still medical, and still deferred to specialists.
Coupon hunting? Resume writing? not medicine.
ok.
> This is not about taxes
why not? Maybe you are missing the point I am making, but then you are selectively not responding to things I already wrote, that I think I outlined pretty clearly in the last post.
what is out of scope here? Where does it end? You suggest a doctor should do more somehow, but doesn't say where the limit is, if any. the point is your own arguments seem to apply to taxes, resumes, coupons etc as much as anything else more medically related.
I think it's pretty rich complaining about me being "obtuse", when you fail to address the main point of my posts.
The whole pharmacy coupon thing is an almost entirely American phenomenon. US and NZ are the only countries that allow direct-to-consumer marketing of drugs in the first place.
I've had very serious pushes from doctors to get medication like this.. the doctor was absolutely aware of the economics involved, including what was good for him. I thought I was not at a doctor's office, but dealing with a used car salesman.
1) you're guilt tripping them
2) you're giving them cover if they get asked about it
It's much nicer to work at a grocery store pharmacy than a dedicated retail chain because of this
Disclosure laws curb the worst historical excesses, and there are good arguments in favor of further restrictions. Good reps serve an educational purpose, and when the medicines available to treat a disease have evolved dramatically, that education can be necessary.
For example, there are still primary care physicians who just go to sulfa drugs then insulin after metformin. There are much better medicines that actually protect other organ systems too! But they didn't learn about them in med school, and it takes some consistent nudging to get them to break the old prescribing habits.
Large organizations do not monolithically fit one description or judgment. Amazon does lots of other questionable or downright malicious things. This is not one of those.
A lot can be said about Amazon and thats valid, but they do put a lot of focus on their customers.
We can argue that them doing this likely means that they will get more business and that will also prop up the rest of their prescription offerings, but that goal ultimately has a benefit to people that need this medication.
If they can apply this to copay cards and anything else that saves people who need these medications (by that I mean just all medications across the board) money but Amazon still gets their money, it would be huge. The system sucks right now.
This is just Amazon trying to grow their pharmacy business at all costs. What they are doing in this specific example is a good thing, but who knows what the fallout will be.
Excellent point. It's easy (in the US, at least) to take the widespread availability of pharmacies in grocery stores, street corners, etc for granted. It's not difficult to see Amazon squeezing the industry enough to make a pharmacy in a grocery store unsustainable.
Rite Aid just bought a beloved local chain and now everyone I know has switched because it’s been run into the ground.
But when a competitor is a behemoth who is able to eat losses until they drive competitors out of business (and has a track record of doing so) so that competition (and customer experience quality) declines in the long run, that's the rare-but-true case of "a new competitor entering the market is bad, actually".
Between this and being treated like a junkie when I need a hold-over dose of a non-addictive non-narcotic medication makes me hate the cards I was dealt. Pharmacists are complicit in this even though they frame themselves as victims of the system as well. Those kickbacks from drug companies and doctors are just too damn good.
Anyone who actually deals with the medical system knows these services are not a universal good. I always advise people to stick with GoodRx and a local (physical) location for medication so you don't get you medication promptly cut off when (not if) you lose benefits.
To be clear, the thing that I am saying is good is the topic of the article at hand, Amazon automatically applying discounts for insulin. This is orthogonal to their delivery methods.
In a similar vein, some poorly thought out reimbursement rate setting by CMS/HHS related to drug testing wasted at least 216 million dollars. A virtual cottage industry sprung up around it while it was in effect. It was not an isolated incident.
Edit - did a bunch more digging after posting this. Looks like they gave up? https://www.beckershospitalreview.com/pharmacy/cost-plus-dru...
One interesting project to watch is the partnership between Civica and the state of California to produce quality generic insulin. CA obviously has deeper pockets than Cuban was willing to commit to Cost Plus, so hopefuly the partnership will be more fruitful.
Insulin needs to be affordable, but the trade-off we’re seeing (and that comments like this leave out) is that insulin development continues to move forward, with the new stuff being significantly better than what came before it. The $25/vial no Rx stuff at Walmart requires much more discipline and attention than the stuff that is hundreds of dollars per dose. This is the market sending signals that better insulin is worth developing.
Is the discount conditional on something that's not mentioned in the article?
This is price discrimination/segmentation. You want to sell the same product at different prices to different people. And because it is medicine, you do not want (too many) poor people to miss out on getting it, or at least you want plausible deniability for trying to make the product available to poorer people.
Enter manufacturer coupons, PBMs, and myriad government and health insurance reimbursement policies. The whole system is an emergent phenomenon of trying to deliver different quality/quantity of healthcare to different populations, but for political purposes, maintaining plausible deniability that society (via its elected leaders) is okay with some people getting less healthcare than others (or paying more or less than others).
A common trope among anti-capitalists is they conflate capitalism in practice (i.e. crony capitalism) with actual free market capitalism (the theoretical construct).
When debating semantics like you are the difference between these two is fundamentally important.
Phrased a different way: discussing capitalism as it actually always has been, and as the term was coined to refer to, in the real world instead of nonsense fantasy that isn't implementable in reality, and which was only constructed as a distraction from that reality to deflect criticism of the real-world system.
So you replied to my post calling out your theorycrafting saying my theorycrafting is wrong.
Alrighty.
Nope, this is wrong already, befoee getting to the rest.
> This is price discrimination/segmentation.
Firms maximizing profits has... something to do with capitalism
So, the discount is conditional?
How does Amazon know if the user is eligible?
I read the article twice, and nowhere does it say these "coupons" and "pledges" are for some subset of customers.
No medication, no problem. You see, tovarisch!
Who wins? The people who are granted the knowledge or seek the knowledge themselves. The sellers of these medical products too because they get to advertise the coupon applied price of their product and...
Who loses? The people who are not granted the knowledge or don't seek out the knowledge. Perhaps they don't know the system is a game and there ways of circumventing prices. Perhaps they're desperate for the life giving medication.
Overall USA's medical industry is very opaque and anti-competitive in general. It really really sucks. I'd love it if we rearranged the system such that capitalistic market forces could do its work, such as letting consumers price shop. Its very frustrating.
Basically discounted medicines are medicines being sold at the market price insurance companies pay in practice. But there’s an incentive for insurance companies for list prices for medicines to be sky high, and given the market power of insurers as buyers, those incentives extend to manufacturers.
Then you have an ideological and advertising machine that convinces patients that things are the way they are because America is the best possible world, and everything in America is necessarily better/more advanced/higher quality then in any other place.
I’ve seen people who really believe that American insulin is absurdly more expensive than in the rest of the world because it is of higher quality. But mind you, even in Western Europe, that arguably has even more stringent standards for a lot of things than the USA, insulin is absurdly less expensive than in America. Do people really believe that people in Switzerland and Norway are getting inferior insulin compared to the “exceptional” American insulin?
This goes way beyond insurance companies. There's an entire class of middlemen known as PBMs (Pharmacy Benefit Managers). They are probably the largest contributor to medication pricing being a complete scam and disaster in the US. Of course the scam is so profitable that CVS now owns both an insurer (Aetna) and a PBM (Caremark).
PBMs are so bad, that in some circumstances, pharmacies can owe the PBM money after dispensing a drug.
Is the theory that PBM’s are foolishly generous and incur undue costs for their clients the insurance companies?
Or that they’re foolishly stingy, and force pharmacies to offer unsustainably low prices?
When the PBM is owned by the insurer in the first place, it is a moot point. The 5 biggest health insurers all have their own PBM.
If you’re a biotech investor with a few billion dollars to burn, sure, a high-margin, high-volume biologic looks like an appealing bet.
But then you look at what’s involved in the FDA approval process even after Congress added carveouts for bio-similar generics.
And at the end of that billion dollar gauntlet, there’s Congress insisting that, damn-the-market and our own regulatory hurdles, insulin is so important it must be sold at a modest fraction over cost of production. This is a life saving substance, to which many who can certainly afford to pay would ascribe considerable value (this is the “demand” in supply & demand). The result of these price controls will inevitably be shortages, which will be blamed on the same greedy capitalists who are being blamed for the state of a market ultimately structured by this same Congress.
a) Insulin is cheaper, a fucking lot cheaper b) Its prices (along with a lot of other drugs) are regulated.
I haven't yet heard from my friends in Switzerland, Norway or Belgium any sad story about people rationing their insulin supplies because it is mind bogling expensive, and shortages are also unheard of.
Insulin is basically a solved problem. I don't care about an hypothetical techbro sad story of how he won't invest his billions to disrupt the insulin market because bad government doesn't allow it to sell untested products.
This does not make any sense to me. If the price for a medicine decreases, then the insurance company's costs decrease. Why would a higher "list" price benefit insurers?
Obviously, manufacturers would like prices for medicine to increase, as that would cause their revenue to increase. But that has nothing to do with insurance companies.