Mar 012016
 


Photo by Chris Potter

There has been a well-documented trend toward higher drug prices in the US. Turing Pharma turned heads by raising the price of Daraprim® by 5,000 percent, and there has been more news coverage of the practice of hiking drug prices. At the same time, new technologies and group purchasing power are being harnessed to counteract this trend. These two competing forces will help shape the ongoing debate on drug pricing.

In early February 2016, Blink Health announced the launch of its mobile app and website, purposed to help consumers secure the lowest possible retail price. Blink is not a retail pharmacy, but it works with MedImpact, a pharmacy benefits management company affiliated with 60,000 pharmacy locations. Users can supposedly get better prices on generics, because Blink can use its group purchasing power to negotiate lower prices. The app and website quote a price, which the user pays prior to going to the pharmacy. He/she still must provide a prescription to the retail pharmacy, but the price is secured for any of the affiliated locations.

Blink claims that users can save 80% on generics; that 40% of its medications cost less than $5; and, that 50% of its medications cost less than $10. The company claims that higher prices cause patients to skip doses and to stop the regimen entirely. They claim that their tool will help increase access to medications through lower prices.

Navigating drug pricing is notoriously labyrinthine. Most retailers do not post their prices and prices vary for different consumers and consumer types within the same market. Lisa Gill, deputy editor of Consumer Reports Best Buy Drugs is quoted by the NY Times saying, “The prices are all over the map, even within the same ZIP code.”

Since 2006, Wal-Mart, the world’s largest retailer, has been providing certain generics for $4 for a 30 day prescription. The company maintains a list of drugs that it provides at that price. The company provides this price by using its purchasing power, and by taking advantage of its distribution system. There are other programs, such as GoodRX, that aim to provide patients the lowest possible prices on generics. GoodRX is similar to Blink Health, but it provides coupons to be used at the retail site. Blink allows patients to pay for the drug prior to picking it up at one of the affiliated pharmacies.

Brand name drugs fall outside of the scope of these programs. In addition, generic drugs like Daraprim®, which is a sole-source product, will not likely be affected by these and similar price control programs. However, Wal-Mart, Blink, GoodRX and others are applying downward price pressure to the market for generic drugs. Whether this is sufficient to keep prices under control, overall, is yet to be seen. The companies leverage technology to secure lower prices. Consumers demand lower prices, and these services will survive and profit if they provide value to consumers. The prices they offer are closer to the prices paid by insurers.

High drug prices can have a deleterious effect on patient behavior. As Blink Health has claimed, higher prices often discourage patients from filling out prescriptions and often push them to skip doses. Tools that help patients secure drugs at lower prices, even if only in retail settings, should have a positive effect. A case can be made that these tools address only the symptom of higher prices and not the causes. Factors that drive up prices may be ignored, since these tools provide lower prices as an end result. Drug companies can refuse to address higher prices by pointing to these tools as proof that their drugs are ultimately affordable.

The ongoing drug price debate, fueled by Turing’s move and others, highlights the high cost of prescription medications. The new tools take advantage of the information gap between consumer and producers. They do provide a valuable service, although the debate continues. Should there be price controls on critical drugs? Should the US move to a single buyer system, as is the case in Canada and European countries? If so, Blink, GoodRX, and other similar businesses will be impacted, since they would be unable to provide lower prices than that set by the government.