8 ms·

Amazon Pharmacy automates discounts to help insulin patients get pledged prices

79 points by benkan 3y ago

tantalor 3y ago
If the discount is "automatic", how is this different than "we simply lowered the price"? Is the discount conditional on something that's not mentioned in the article?
- pnutjam 3y ago
  It's an end run around re-imbursement rates for insurance and how the pharmacy benefit managers get paid. Basically an artifact of why capitalism sucks.
  - lotsofpulp 3y ago
    This has nothing to do with capitalism. 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).
    - umeshunni 3y ago
      capitalism sucks is just 19 year old redditor cliche for anything they don't understand. You can just ignore people who say that.
      - mrguyorama 3y ago
        Do you deny that capitalism as a system incentivizes groups to make convoluted systems and interactions that increase prices?
        zer8k 3y ago
        You are conflating crony capitalism with free market capitalism. If we are going to argue in terms of pure theory (which you are) then more competition, and therefore the free market, would select for systems that reduce friction between the customer and their wallet. Crony capitalism is what happens when a mixture of regulatory capture, unhinged corporate lobbying, and greed combine to form a trifecta of fuck for everyone else. 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.
        dragonwriter 3y ago
        > You are conflating crony capitalism with free market capitalism. 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.
        zer8k 3y ago
        > discussing capitalism as it actually always has been, So you replied to my post calling out your theorycrafting saying my theorycrafting is wrong. Alrighty.
        dragonwriter 3y ago
        > So you replied to my post calling out your theorycrafting [...] Nope, this is wrong already, befoee getting to the rest.
    - pnutjam 3y ago
      This is an artifact of capitalism driven healthcare. It's only an issue in the U.S. It's the end results of incentive's designed to extract money vs incentives designed to provide healthcare. (i.e. capitalism)
    - dragonwriter 3y ago
      > This has nothing to do with capitalism. > This is price discrimination/segmentation. Firms maximizing profits has... something to do with capitalism
    - tantalor 3y ago
      > This is price discrimination 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.
  - umeshunni 3y ago
    so, how would communism have solved this problem, comrade?
    - deleted 3y ago
      [deleted]
    - pnutjam 3y ago
      Get a load of Mr. "everything I hate is communism" over here.
    - zer8k 3y ago
      Simple, Tovarisch. No medications are available. Many of the comrades are counting and re-counting wheat berries in the already scarce tillable fields. We have no private property so smart chemists will not produce more than the minimum medications as ordered by the Chairman. The capitalist doctors were sent to the gulag for working outside of the three clinics we have. No medication, no problem. You see, tovarisch!
irrational 3y ago
One of my kids was on a medication that was super expensive, unless you used a coupon. The doctor didn’t tell us anything about a coupon, we had to find out from the people working at the pharmacy when we went to pick it up. It turned out to be quite a bit of work to find the coupon and print one off, but it greatly slashed the price.
- homero 3y ago
  Doctors aren't pharmacists and especially not pharmacies
  - alistairSH 3y ago
    That's fair, however both my dermatologist and GP have started discussing the price of drugs they're recommending. It's an unfortunate effect of the state of medical care (the entire system) in the US.
  - dghughes 3y ago
    My Dad's doctor was wonderful he worked with drug companies and was able to get my Dad's medication heavily rebated to the point his health coverage covered the difference. Anything else could be claimed on taxes. 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.
    - lotsofpulp 3y ago
      homero was not disputing that doctors can help, they were pointing out that the expectation of a doctor to know the ins and outs of someone's particular insurance plan and pricing of particular medicines is not reasonable, therefore irrational bringing up how the doctor neglected to mention a coupon in their story is an irrelevant detail since there should not be any expectation of doctors knowing about coupons for the medicine. 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.
greggyb 3y ago
This is a good thing, regardless of whatever else Amazon is doing. 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.
- nerdjon 3y ago
  Honestly this has been one of my thoughts with Amazon getting into prescriptions in the first place. 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.
- elzbardico 3y ago
  Yes. The real world is generally far more complicated than our deeply polarized society increasingly think it is.
- delfinom 3y ago
  The problem is, if you read the stories, Amazon is turning pharmaceutical work into basically another warehouse job of high quotas and speed. To the point that pharmacies just ignore Amazon's requests to transfer meds because Amazon would use autodialers to call pharmacies, and then put the called on pharmacy on hold until the single pharmacist on call at Amazon picks up that call after dealing with dozens of others at the same time. Meanwhile wasting the time of the other pharmacies. 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.
  - vwcx 3y ago
    > 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.
sovietmudkipz 3y ago
I consider the idea of applying discounts for medical products amoral customer hostile actions. 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.
- elzbardico 3y ago
  The problem is that discounts are just a somewhat benign face of a system that is a mess because you have lots of incentives in the wrong place. 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?
  - delfinom 3y ago
    >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. 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.
ahzhou 3y ago
Interesting how Amazon uses “Automated Discounts” to get around “Usual and Customary” prices. Typically, pharmacies only get reimbursed by PBMs (middlemen between insurers, manufacturers, and pharmacies) up to a maximum of of their U&C price so their incentive is to set it really high in order to maximize reimbursement rates. 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-our-broken.html https://www.drugchannels.net/2020/08/how-goodrx-profits-from...
- lotsofpulp 3y ago
  For most people, the PBM is just a department of the managed care organization (MCO, aka health insurance company) that deals with medicine. So not much of a middleman in those cases. 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.
  - yumraj 3y ago
    Are there any resources where I can learn more on how the overall pharmacy/prescription drugs/insurance/patient value chain works in the US?
    - lotsofpulp 3y ago
      I would search forums like reddit.com/r/pharmacy or /r/medicine or sdnforum For example https://www.reddit.com/r/pharmacy/comments/33ac79/what_is_the_difference_between_a_pbm_and_insurance/ 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.
fred_is_fred 3y ago
I've been wondering why Mark Cuban's drug company - which takes a cost plus model, doesn't make insulin. It seems like a market that is likely growing, effectively has no substitutes, and you need it to live. Is it hard to manufacture? It's been around for 50+ years so I'd think they can make it efficiently by now, but perhaps not? Edit - did a bunch more digging after posting this. Looks like they gave up? https://www.beckershospitalreview.com/pharmacy/cost-plus-drugs-ends-plan-to-sell-insulin.html https://www.beckershospitalreview.com/pharmacy/cost-plus-dru...
- 1123581321 3y ago
  It's been around about a century. It's difficult to manufacture a consistent biosimilar insulin. Regulation, physicians and patients all place a high premium on consistency and especially avoiding inconsistent doses that cause hypoglycemia. Additionally, the manufacturers, physicians and patients all push to move to new insulins as often as they become available, reducing the demand for generics (which is why, even though Walmart and Costco sell cheap over-the-counter insulin, almost no one uses it.) 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.
- coredog64 3y ago
  Insulin sold today is not the same bovine insulin that was originally patented 100 years ago. 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.
  - lotsofpulp 3y ago
    It is amazing that there is so much discourse around insulin with such a basic errooneous assumption- that "insulin" is just insulin and completely fungible.
duffpkg 3y ago
Several people have raised the point that if the discounts are automatic why not just change the pricing? Pharmaceutical pricing and a lot of healthcare pricing in general are strange in the sense that they are organized to capture what certain plans/institutions will pay. If there is a plan out there that says "we will pay $540 for a month of lifesaviex" you are going to see prices at $540 or above to capture that even if in other contexts some patients are getting it at $35 a month. There is a lot to potentially discuss about that but cherry picking one interesting thing... Many very large employer plans are administrated by the insurance companies names you are familiar with, Anthem, United, etc. However the details of the plan, including reimbursements, are actually set by people at the employer, not the plan. There is someone in the giant beauracracy at these companies who compiles/edits/approves a massive spreadsheet and out into the market it goes. Mistakes are common. 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. https://oig.hhs.gov/oas/reports/region9/92103006.pdf https://oig.hhs.gov/oas/reports/region9/92103006.pdf
- tantalor 3y ago
  That doesn't really answer the question. I think there must be some important details missing from the article and your explanation, like does Amazon know the customer has a plan, or qualifies for some discount somehow?
ThePowerOfFuet 3y ago
https://archive.li/Pjziu https://archive.li/Pjziu

79 points by benkan 3y ago

If the discount is "automatic", how is this different than "we simply lowered the price"? Is the discount conditional on something that's not mentioned in the article?

pnutjam 3y ago
It's an end run around re-imbursement rates for insurance and how the pharmacy benefit managers get paid. Basically an artifact of why capitalism sucks.
- lotsofpulp 3y ago
  This has nothing to do with capitalism. 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).
  - umeshunni 3y ago
    capitalism sucks is just 19 year old redditor cliche for anything they don't understand. You can just ignore people who say that.
    - mrguyorama 3y ago
      Do you deny that capitalism as a system incentivizes groups to make convoluted systems and interactions that increase prices?
      - zer8k 3y ago
        You are conflating crony capitalism with free market capitalism. If we are going to argue in terms of pure theory (which you are) then more competition, and therefore the free market, would select for systems that reduce friction between the customer and their wallet. Crony capitalism is what happens when a mixture of regulatory capture, unhinged corporate lobbying, and greed combine to form a trifecta of fuck for everyone else. 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.
        dragonwriter 3y ago
        > You are conflating crony capitalism with free market capitalism. 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.
        zer8k 3y ago
        > discussing capitalism as it actually always has been, So you replied to my post calling out your theorycrafting saying my theorycrafting is wrong. Alrighty.
        dragonwriter 3y ago
        > So you replied to my post calling out your theorycrafting [...] Nope, this is wrong already, befoee getting to the rest.
  - pnutjam 3y ago
    This is an artifact of capitalism driven healthcare. It's only an issue in the U.S. It's the end results of incentive's designed to extract money vs incentives designed to provide healthcare. (i.e. capitalism)
  - dragonwriter 3y ago
    > This has nothing to do with capitalism. > This is price discrimination/segmentation. Firms maximizing profits has... something to do with capitalism
  - tantalor 3y ago
    > This is price discrimination 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.
- umeshunni 3y ago
  so, how would communism have solved this problem, comrade?
  - deleted 3y ago
    [deleted]
  - pnutjam 3y ago
    Get a load of Mr. "everything I hate is communism" over here.
  - zer8k 3y ago
    Simple, Tovarisch. No medications are available. Many of the comrades are counting and re-counting wheat berries in the already scarce tillable fields. We have no private property so smart chemists will not produce more than the minimum medications as ordered by the Chairman. The capitalist doctors were sent to the gulag for working outside of the three clinics we have. No medication, no problem. You see, tovarisch!

irrational 3y ago

One of my kids was on a medication that was super expensive, unless you used a coupon. The doctor didn’t tell us anything about a coupon, we had to find out from the people working at the pharmacy when we went to pick it up. It turned out to be quite a bit of work to find the coupon and print one off, but it greatly slashed the price.

homero 3y ago
Doctors aren't pharmacists and especially not pharmacies
- alistairSH 3y ago
  That's fair, however both my dermatologist and GP have started discussing the price of drugs they're recommending. It's an unfortunate effect of the state of medical care (the entire system) in the US.
- dghughes 3y ago
  My Dad's doctor was wonderful he worked with drug companies and was able to get my Dad's medication heavily rebated to the point his health coverage covered the difference. Anything else could be claimed on taxes. 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.
  - lotsofpulp 3y ago
    homero was not disputing that doctors can help, they were pointing out that the expectation of a doctor to know the ins and outs of someone's particular insurance plan and pricing of particular medicines is not reasonable, therefore irrational bringing up how the doctor neglected to mention a coupon in their story is an irrelevant detail since there should not be any expectation of doctors knowing about coupons for the medicine. 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.

greggyb 3y ago

This is a good thing, regardless of whatever else Amazon is doing. 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.

nerdjon 3y ago
Honestly this has been one of my thoughts with Amazon getting into prescriptions in the first place. 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.
elzbardico 3y ago
Yes. The real world is generally far more complicated than our deeply polarized society increasingly think it is.
delfinom 3y ago
The problem is, if you read the stories, Amazon is turning pharmaceutical work into basically another warehouse job of high quotas and speed. To the point that pharmacies just ignore Amazon's requests to transfer meds because Amazon would use autodialers to call pharmacies, and then put the called on pharmacy on hold until the single pharmacist on call at Amazon picks up that call after dealing with dozens of others at the same time. Meanwhile wasting the time of the other pharmacies. 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.
- vwcx 3y ago
  > 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.

sovietmudkipz 3y ago

I consider the idea of applying discounts for medical products amoral customer hostile actions. 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.

elzbardico 3y ago
The problem is that discounts are just a somewhat benign face of a system that is a mess because you have lots of incentives in the wrong place. 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?
- delfinom 3y ago
  >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. 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.

ahzhou 3y ago

Interesting how Amazon uses “Automated Discounts” to get around “Usual and Customary” prices. Typically, pharmacies only get reimbursed by PBMs (middlemen between insurers, manufacturers, and pharmacies) up to a maximum of of their U&C price so their incentive is to set it really high in order to maximize reimbursement rates. 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-our-broken.html https://www.drugchannels.net/2020/08/how-goodrx-profits-from...

lotsofpulp 3y ago
For most people, the PBM is just a department of the managed care organization (MCO, aka health insurance company) that deals with medicine. So not much of a middleman in those cases. 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.
- yumraj 3y ago
  Are there any resources where I can learn more on how the overall pharmacy/prescription drugs/insurance/patient value chain works in the US?
  - lotsofpulp 3y ago
    I would search forums like reddit.com/r/pharmacy or /r/medicine or sdnforum For example https://www.reddit.com/r/pharmacy/comments/33ac79/what_is_the_difference_between_a_pbm_and_insurance/ 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.

fred_is_fred 3y ago

I've been wondering why Mark Cuban's drug company - which takes a cost plus model, doesn't make insulin. It seems like a market that is likely growing, effectively has no substitutes, and you need it to live. Is it hard to manufacture? It's been around for 50+ years so I'd think they can make it efficiently by now, but perhaps not? Edit - did a bunch more digging after posting this. Looks like they gave up? https://www.beckershospitalreview.com/pharmacy/cost-plus-drugs-ends-plan-to-sell-insulin.html https://www.beckershospitalreview.com/pharmacy/cost-plus-dru...

1123581321 3y ago
It's been around about a century. It's difficult to manufacture a consistent biosimilar insulin. Regulation, physicians and patients all place a high premium on consistency and especially avoiding inconsistent doses that cause hypoglycemia. Additionally, the manufacturers, physicians and patients all push to move to new insulins as often as they become available, reducing the demand for generics (which is why, even though Walmart and Costco sell cheap over-the-counter insulin, almost no one uses it.) 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.
coredog64 3y ago
Insulin sold today is not the same bovine insulin that was originally patented 100 years ago. 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.
- lotsofpulp 3y ago
  It is amazing that there is so much discourse around insulin with such a basic errooneous assumption- that "insulin" is just insulin and completely fungible.

duffpkg 3y ago

Several people have raised the point that if the discounts are automatic why not just change the pricing? Pharmaceutical pricing and a lot of healthcare pricing in general are strange in the sense that they are organized to capture what certain plans/institutions will pay. If there is a plan out there that says "we will pay $540 for a month of lifesaviex" you are going to see prices at $540 or above to capture that even if in other contexts some patients are getting it at $35 a month. There is a lot to potentially discuss about that but cherry picking one interesting thing... Many very large employer plans are administrated by the insurance companies names you are familiar with, Anthem, United, etc. However the details of the plan, including reimbursements, are actually set by people at the employer, not the plan. There is someone in the giant beauracracy at these companies who compiles/edits/approves a massive spreadsheet and out into the market it goes. Mistakes are common. 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. https://oig.hhs.gov/oas/reports/region9/92103006.pdf https://oig.hhs.gov/oas/reports/region9/92103006.pdf

tantalor 3y ago
That doesn't really answer the question. I think there must be some important details missing from the article and your explanation, like does Amazon know the customer has a plan, or qualifies for some discount somehow?

ThePowerOfFuet 3y ago

https://archive.li/Pjziu https://archive.li/Pjziu