For some people running mail order pharmacies, this analysis is no big surprise. They’re running off to their boss to show them that it’s not just their mail order facility, but it’s an industry issue. To others, they’re left scratching their head trying to figure out why this is. If mail order is where all the money is, what does this mean to them? (The historical PBM model put most profit in generics filled at mail order.)
Per a statistic mentioned in Drug Benefit News from Pembroke Consulting (and discussed here by Adam Fein), mail order prescriptions from 2012 to 2013 (excluding Medicare) dropped 9.2% while retail prescriptions jumped 2.7%. (This is not new news, but this is a big drop.)
I’ve talked about the issues and challenges of mail order many times:
- Retail satisfaction seems to beat mail order satisfaction based on different studies, but at the same time, there are studies showing the exact opposite.
- Presentation on the challenges with improving mail order rates
- Why clients don’t always save using mail order
- Why consumers choose mail
At the end of the day, I simplify the mail order issue down to four major challenges:
- Savings are disappearing. Savings were primarily on brand drugs filled for 90-days. When you fill a generic at mail and your getting 15-30 days supply for “free” (i.e., no copay), that’s great, but the copay savings is $4-10 every 90-days. With generic utilization in or around 80%, this is a real issue.
- Transparency, coupons, and cash pay. With apps like GoodRx, it’s easy for consumers to find the lowest cost option for them to fill a prescription. That might be in a discount program. It might be to pay cash. It might be with a coupon. And, it might be mail order. They now can figure it out and optimize their spend easier. Mail isn’t the only option.
- High expectations. As a society, we continue to be more and more of a society that wants an instant response. Sending prescriptions off to a black box with a multiple day turnaround and difficulty tracking the prescription doesn’t meet our modern expectations. (A connected model of electronic prescribing may one day change this.)
- Cash flow. As I always point out to people, we (those working in the industry) don’t represent the average American. While it seems so logical to pay for a 90-day script in order to save money, that means you have to have the cash to pay for 3 months upfront. Not everyone can do that especially when they have multiple prescriptions…And, no mail order pharmacy that I know of wants to be in the credit business.
Will mail order disappear? Of course not, but PBMs need to continue to either find ways to improve the consumer experience and make it better or they need to recognize the issues that exist and continue to diversify. And, with more 90-day prescriptions at retail for the same copay (i.e., CVS Caremark), this will continue to shift expectations.