Drug Discount Cards – Lifting the Veil of Secrecy

by Richard J. Sagall, MD, President of NeedyMeds


Everywhere you look you see claims of savings from drug discount cards. You may be skeptical when cards promise huge savings. And you should be because not all the claims are real.


Too Good to Be True

The old saying “If it seems too good to be true then it probably is” applies to drug discount cards. Drug discount cards have the potential of saving you a lot of money, but you have to understand how they work.

It’s important to remember that they all work basically the same way. Here’s the scoop.

First, a company called a “pharmacy benefits manager” (PBM) or an adjudicator sets up a network of participating pharmacies that agree to accept the cards. Then the PBM negotiates with each pharmacy chain and all the participating local pharmacies offer a discount on the drugs they dispense. The discount is usually a percentage of the cash price of the drug. The percentage may vary from drug to drug.

Next, the PBM finds companies or organizations to market their card. These groups, called marketers, may be for-profit companies or non-profit organizations. They may be multilevel marketing organizations. Some marketers work with other groups.


The Finances Behind Drug Discount Cards07.31.13.2

The amount you pay when using a drug discount card is the sum of four components. This is true for all drug discount card.

1. The Negotiated Discounted Price – The PBM does its best to negotiate the best discount from the pharmacies. Some PBMs do a better job of this than others. The size of the PBM, its market share and how much business it will direct to the pharmacy are all important factors in the final discount.

2. Pharmacy Transaction Fee – Each time a card is used the pharmacy earns a small amount to help cover their costs.

3. PBM Transaction Fee – The amount the PBM earns to cover their costs of setting and running the pharmacy network, processing claims, etc.

4. Marketer Fee – This is how much the marketer earns for promoting and distributing the card.

Who pays all these fees? You do!


Why Pharmacies Accept Drug Discount Cards

You may wonder why pharmacies accept drug discount cards. After all, wouldn’t they make more by not accepting the cards and charging customers the non-discount price? There are five reasons pharmacies accept the cards:

1. Earning a profit even at the discounted price – They wouldn’t offer such a large discount that they lose money on the transaction.

2. Selling prescriptions they wouldn’t sell otherwise – For example, a customer may not be able to afford a prescription with a non-discounted price of $100 but may be able to afford it at the discounted price. The pharmacy gets the sale, but earns a lower profit.

3. Building customer loyalty – The drugstore business is very competitive. If a pharmacy gives you a good discount with a drug discount card you are more likely to continue to patronize that store than others.

4. Increased non-pharmaceutical purchases – There’s a reason most pharmacies are at the back of the drugstore. This arrangement forces you to walk down aisles, increasing the chances you will make additional purchases.

5. Peer pressure – If all the pharmacies in town but one accept drug discount cards, that one will lose business.


How Marketers Make Money

There are two main ways card marketers make money from drug discount cards:

1. Transaction Fees – Each time a marketer’s card is used the marketer earns a transaction fee designed to cover expenses and make a profit. The size of the fee varies quite a bit. Generally speaking, non-profit companies and marketers that don’t have expensive marketing programs have lower transaction fees. Lower fees mean more savings for card users. Remember, card users pay the fees.

2. Selling of Information – Some card marketers gather personal information on people who use their card. They can do this if you have to register to obtain a card. They can also receive personal information each time you use the card. For example, a company selling diabetic supplies would pay for a list of names and addresses of people who buy insulin.


Buyer Beware07.31.13.3

Here are some tips when selecting a drug discount card:

1. Never pay for a card – There are many good cards that are free. There is no reason to pay for a card since it’s unlikely it would offer a discount any better than a free one.

2. Never register for a card – This is one way marketers get info that they sell. The only reason to give your name and address is if the card is being mailed to you.

3. Read the privacy policy – Make sure the marketer has a privacy policy that you agree with. Even then, there’ no guarantee they will follow it.

4. Helpline – All reputable marketers have a toll-free helpline. Give the line a call and see how responsive they are. Do they have real people answering your questions or just a recording? If you leave a message do they call you back?

5. Shop around – Try different cards to see which offers you the best discount. Ask your pharmacist which has the best prices.

6. Consider who is making money – All things being equal, using a card offered by a non-profit is best. Any money they make is going to further their cause while the money earned by a for-profit is just going into someone’s pocket.


Richard J. Sagall, MD, is the president and co-founder of NeedyMeds. He spent 25 years practicing family and occupational medicine. He now devotes his time to NeedyMeds and Pediatrics for Parents (www.pedsforparents.com), a children’s health newsletter.

Price Shopping Pharmacies To Save On Meds

Sumanah was a 26 year old event planner in New York City when suddenly diagnosed with congestive heart failure.  Sumanah was like many typical 26 year olds, without health insurance and no savings capable of paying for her medical bills. Taking 10 medications for her condition, Sumanah was paying full price at what she “thought” was the cheapest pharmacy. After she discovered that not only were some pharmacies cheaper for the same exact medication, she learned that some pharmacies can be upwards of 16 times more expensive than another pharmacy right across the street. Using this information, Sumanah was able to price shop for the right pharmacy and save a lot on her prescription costs. This story, although not uncommon, shows how important shopping around for medications can be.

In their May issue, Consumer Reports published an article confirming the experience Sumanah and many others have each time they go to fill a prescription. The study focuses on five of the most prescribed medications in the U.S. and reviews more than 200 pharmacies for price comparisons. The findings show the details of each pharmacy and drug researched as well as the overall discrepancy between the lowest cost pharmacy and the highest cost pharmacy. For the same prescriptions, the difference was a whopping $749 per month or 447% between the highest and lowest cost options.

Price shopping prescriptions from one pharmacy to another can dramatically cut out of pocket costs for patients without changing medications. The cost savings for patients using these medications are large and can help patients who were unable to afford medication in the past, be able to consider options at a low cost pharmacy. The current lack of pharmaceutical price transparency currently causes many patients to simply stop medication because it is too expensive for them to afford. When patients perceive medication as being too expensive, many times they will simply stop taking their prescription to avoid the cost, which is a truly dangerous option for patients to consider.

Currently, non-adherence (not taking your medication) is cited by The IMS Institute of Healthcare Informatics as the largest contributor to healthcare costs in their June, 2013 study, “Avoidable Costs in U.S. Healthcare.” The study shows that a patient’s inability to stay on a prescribed medication is estimated to cause over $100 Billion in avoidable healthcare costs due to the resulting health complications, hospital visits, and additional advanced treatment.

As a practicing doctor, it really amazes me how a simple understanding of pharmacy pricing can change a patient’s ability to afford their medications, take them as directed, and avoid the complications that can result from not taking them correctly. I make it a point to share this message with all of my patients and colleagues and I look forward to the day when everyone knows that by simply walking to the pharmacy across the street, they could save a lot of money.

Ali Khoshnevis

Ali Khoshnevis is a practicing Optometrist and the CEO of WeRx.org, a pharmacy price comparison site and app with the goal of helping patients find the lowest cost medications in their neighborhood.


This article originally appeared on CostofCare.org

Applying to a Patient Assistance Program (PAP)

Today many Americans find themselves struggling to pay for their medications, unfortunately leading to difficult choices between paying for food, rent, or prescriptions. Luckily pharmaceutical companies and other organizations are aware of this fact, and doing what they can to help alleviate costs for those struggling financially. For many drugs that may seem too expensive to afford there are Patient Assistance Programs (PAPs). These programs offer the drugs at little to no cost to the consumer.


Finding a Program for your Medication: apply for a PAP, first make sure one is available for your medication. You can look up each PAP alphabetically on the NeedyMeds site here. There are both brand name and generics listed. Once you find your drug, click on the name of the medication to get to the program details page. Here all of the contact information for the program is listed, along with the application form. You will need to contact the program directly to apply.



Eligibility Requirements:

Every Patient Assistance Program has it’s own set of guidelines and requirements. Most programs require that you are a legal United States resident. Many of them also have an income requirement and ask for a tax return or pay stub to prove your income level. Another common requirement is a diagnosis. If you are taking a medication for off-label use you may be out of luck. It is also common for the program to only accept uninsured or underinsured patients, or those on Medicare part D.



07.17.13Once you have called the program and discussed your eligibility, the next step is to download and complete an application form. Most applications are number of pages long, with portions for both you and your doctor to complete. Be sure to double-check your application before sending it in, as mistakes on the form can cause for a delay in receiving your medication. Most programs take 1-2 weeks to determine if you are accepted, with another 1-2 weeks for delivery of the medication.


Extra tips:
We recommend contacting the program even if you do not meet the eligibility requirements – in many instances they will allow you to enter the program. When speaking with a call center representative always be courteous, they get many calls every day and being friendly is always a welcome approach.

What to ask your Pediatrician

I understand it’s tough to ask the question “Why?” to your child’s doctor when the she makes a treatment or testing decision. But if you are going to be an active and informed partner in your child’s health care you need to know when to pose that question.

I am not suggesting you question every decision the doctor makes, but sometimes it’s appropriate.

Here are a few hints as to when you may want to question the doctor.

What will happen if I don’t give my child the medicine? 
 This is usually a good question to ask if the medicine is just to treat a symptom and not the underlying cause of the problem – for example, a decongestant for a stuffy nose or cold, or an antibiotic for what may be a viral infection.

It’s important to remember that every drug has the potential for side effects. Even a drug a child has taken many times may still cause a problem.

Another thought is that perhaps there’s a reason for the symptom. For example, the body’s immune system works better at a higher than normal temperature. There may be a reason for a fever that accompanies many illnesses. Treating it with a drug may only prolong the illness.7.10.13

How will that test change the treatment? 
 There’s a lot of controversy over the value of “baseline” tests. If the test results won’t change the treatment plan, then there’s little reason to do it.

What’s the purpose of a follow- up visit? 
How many times have you wondered why you are bringing your now healthy child back to the doc- tor for a follow-up visit after an illness? The doctor takes a quick look, says all is fine, and you are on your way.

Most of these visits aren’t necessary. If the doctor suggests one, ask what you should look for that might indicate all is not well. Most of the time you know if your child is not recovering and needs additional medical attention.

I am not advocating you ignore the doctor’s recommendations. You take your child to the doctor to benefit from her years of education and practicing medicine. But there are times when doctors do things out of habit or think they are needed to meet patient’s expectations.

If your doctor reacts negatively to your questions, it may be time to rethink your relationship with her.


First appeared in Pediatrics for Parents Vol. 28 Issue 9-10

Helpful Online Resources II

This week we are taking another look at online resources that the staff at NeedyMeds think our readers will find helpful. These are some great organizations doing great work, and we think they deserve to be highlighted. If you missed the first installment you can read it here.


Men’s Health Network – The Men’s Health Network is a non-profit organization with the goal of educating men on their health risks – and what they can do to live a longer healthier life. Their website has lots of information. Their blog, “Talking about men’s health,” is updated almost daily with stories and information on healthcare targeted towards men. The Men’s Health Library provides access to government and private sector publications, reports, and analyses that pertain to health, social science, and gender issues. Their resource center is also worth checking out, with handy infographics on scheduling check-ups, and a men’s health A-Z guide.



National Association of Free & Charitable Clinics – The NAFC is a national non-profit focused on the issues and needs of the more than 1,200 free and charitable clinics and the people they serve in the United States. They have a blog featuring information on their events with pictures and videos, highlighting the human side of healthcare services. Their resources page contains information on how to set-up a free clinic, along with free clinic job postings, drug discount cards and more.



Lungevity – The Lungevity Foundation is a national organization focused on improving lung cancer survival rates, ensuring a higher quality of life for lung cancer patients, and providing a community for those impacted by lung cancer. Their site features lots of information on lung cancer – with statistics, symptoms, diagnoses, risk and detection discussions. Their resources page has information to help connect to personalized medicine and clinical trials. Their blog is updated regularly with stories about lung cancer and it’s treatment. Possibly the best tool on the site is the Ask the Experts section, where you can submit questions, read artciles, and watch videos and webinars from lung cancer experts.



HarborPath – HarborPath is a non-profit organization dedicated to helping uninsured patients living with HIV/AIDS gain access to free medications offered by Patient Assistance Programs. They make the entire process of applying for patient assistance for HIV/AIDS programs much simpler by creating a common application form. In addition to directly helping patients get their medication at a reduced cost, they also offer a wealth of information for case managers.