The Impact Of Cash Rxs…No One’s Talking About

I’m only somewhat surprised that no one is talking about this since it can be a touchy subject with little data easily accessible.

The question is what is the clinical impact of the “$4 Generics” type of programs that Wal-Mart has championed and others have followed.  The most obvious potential issue is DUR (Drug Utilization Review) which looks for things like drug-drug interactions.

Let’s look at a few of the issues / challenges here:

  1. Is the number of Rxs really going down like IMS and others report?  Who knows.  Wal-Mart (to the best of my knowledge) doesn’t provide IMS with data…so, if their market share is going up, this would skew the market data.
  2. Are people moving from using their pharmacy benefit to paying cash?  Again, who knows…the PBMs can’t tell since they don’t process cash transactions.  This makes it hard to know the impact of non-adherence.
  3. Are there more drug-drug interactions due to more Rxs being processed as cash?  Again, who knows…are the retailers that process cash transactions pulling in a full profile of all the members other drugs?  Does the member even know all their other drugs?  (Here’s some data on drug-drug interactions)

So, what I would be asking for in the market is an independent study that looked at all data (covered and cash) for a series of patients and see how many drug-drug interactions were missed and what the resulting hospitalizations were attributed to this new poly-pharmacy issue.

4 Responses to “The Impact Of Cash Rxs…No One’s Talking About”

  1. 1. Is the number of Rxs really going down like IMS and others report? Who knows. Wal-Mart (to the best of my knowledge) doesn’t provide IMS with data…so, if their market share is going up, this would skew the market data.
    **Most Chains sell cash claims to either its software vendor other intermediary for XX cents per Rx, the programs that I am familiar with pay 10 cents to the pharmacy, the software vendor/intermediary scrubs the data and then sells the data to a clearinghouse for 25 cents/claim, then the clearinghouse contracts with the manufacturer for 50 cents to one dollar per claim. Over the last few years the volume for a few regional chains that I have contacts at have seen a decline of 1-2% cash/annually
    2. Are people moving from using their pharmacy benefit to paying cash? Again, who knows…the PBMs can’t tell since they don’t process cash transactions. This makes it hard to know the impact of non-adherence.
    ** Many Individuals with insurance are shopping around more depending on their Insurance and drug type. If the item is a preferred generic (tier 1) they usually have it filled on their insurance, however; for non-preferred generics or branded items they might pay cash. Reason many PBMs are using the claim data to determine MAC based on the lowest U&C within a geographic region on their pharmacy network. The PBM require all pharmacies to send their U&C in the claim adjudicated so they are able to build very robust data warehouses. The PBMs have a huge transparency advantage vs the retail pharmacies (Independent or Chain) due to the Business Intelligence they gather from their near real time claims data, representing their entire network of pharmacies (usually the entire marketplace of 55k pharmacies) to analyze. Most pharmacy chains, who do not have their own PBM’s (a huge competitive advantage) and sophisticated data warehouses cannot optimize their pricing due to these limitations. In my opinion the PBMs set reimbursements so that the total amount paid and copay amounts are to their advantage, where the spread between their plan’s copay and U&C is approaching zero, or in some cases the copay is higher compared to some of the prescription savings cards or a Costco.
    3. Are there more drug-drug interactions due to more Rxs being processed as cash? Again, who knows…are the retailers that process cash transactions pulling in a full profile of all the members other drugs? Does the member even know all their other drugs? (Here’s some data on drug-drug interactions)
    *** This needs to be better managed at the patient and provider level using collaborative approach, electronic rxs, and electronic health care records

  2. For those of you in the retail pharmacy business could you help me understand some questions I have regarding cash dispensing trends?

    1. Is cash dispensing volume from a retail pharmacies perspective declining or is it only the volume of branded items dispensed as cash declining? I cannot see the percentage of total declining if the chains are reporting their business from its generic savings plans as cash business
    a. What is the current total percentage (Cash vs. Third party) and then Branded vs. Generic (For example, If total average is 90% third party and% Cash, then what is the branded vs. Generic percentages? Does the generic utilization within the cash business follow industry generic utilization trends, Approx. Generic 60% and Branded 40%?
    2. How do retail pharmacies report 1. National Rx Discount Plans adjudicated online (United Networks of America, Prescription Savings Card, etc. and 2. Internal cash or membership discount programs (ie. Wal-Mart’s $4 generic program, Walgreens Rx Savings Club, Costco’s $10 generic plan)
    a. Do they report as cash or managed care business (100% Copay)?
    b. Do the chains receive rebates/incentives from the Generic Mfgs to include its items on a preferred status ie. plan formulary, if so, who manages the contracting and purchasing, i.e. NDC level PDLs and inventory, does the wholesaler negotiate Generic Deals for these programs?

    Thanks,
    Carl H.

  3. George,

    I have some similar concerns about the reliability of the data. I speculated on this topic in October in http://www.drugchannels.net/2008/10/prescriptions-and-economy-contrarian.html

    Curiously, I continue to see surveys stating that people are not filling prescriptions, yet IMS is reporting new prescriptions have been up 3-4% YOY for the past few months and the drug stores are reporting health same-store pharmacy sales growth.

    Something doesn’t add up.

    Adam

  4. Interesting. Do you think cash transactions will have any serious impact on PBMs?

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