Drug Discount Cards Save Uninsured Seniors Hundreds of Dollars a Year

SIHP research find savings average 15% off pharmacy retail price of medicine

WALTHAM, MA   Uninsured seniors could save hundreds of dollars a year on prescription drugs if they use national discount card programs according to a study released today by the Schneider Institutes for Health Policy (SIHP) at Brandeis University's Heller School for Social Policy and Management.

The study, "PBM-Administered Drug Discount Cards: Savings for Uninsured Seniors" found that the discount card programs offered by pharmacy benefit managers (PMBs) could save senior citizens an average of 15 percent off the retail price of medications charged by pharmacies or $10 for each prescription filled. PBMs, companies that administer nearly 70 percent of the more than three billion prescriptions dispensed in the United States each year, utilize discount negotiations, generic drugs, high- safety procedures and mail service to provide more affordable medications.

For many seniors who have a number of chronic illnesses and take a number of different medications, these percentages translate into hundreds of dollars. The report also revealed that discount cards saved patients an average of 26 percent, or $7 per generic medication and 14 percent, or $11 per brand- name prescription.

"Prescription drug discount card programs are widely used now for seniors and others with no prescription drug coverage, and it is important to understand the extent of savings they provide," said Cindy Parks Thomas, Ph.D., research scientist at the SIHP and lead author of the study.

"Also, if a Medicare prescription drug benefit is passed by Congress, significant cost sharing may remain for many elderly, and policymakers may use discount cards to provide savings to seniors for their out-of-pocket costs. In spite of the considerable savings incurred through use of these discount cards in today's market, prescription drug costs are still extremely high for many seniors, and discount cards alone, without adequate insurance coverage, are not a solution."

The Brandeis researchers examined more than 3.5 million pharmacy claims from eight national discount drug card programs. The savings were determined by comparing the differences between drug prices established by the PBM's discount programs and the amount usually charged by retail pharmacies to the uninsured. Earlier studies that surveyed pharmacies and Internet sites to document price discounts for prescriptions did not use actual pharmacy claims to calculate savings.

The researchers also identified several clinical profiles common among seniors and examined what prescription drug savings could be provided to seniors with these conditions. In one profile, a 65-year old man with asthma and high cholesterol living in an urban area could save as much as $695 or 18.3 percent per year if he used a PBM discount card for his four-drug regimen. The actual savings that would occur for any senior depends on the pharmacy used to fill the prescription. The statistical results found that the savings varied by the location of the pharmacy, whether it was part of a chain or an independent pharmacy and the particular medication.

Findings include:

• Card savings were similar for pharmacies located in rural and urban states.
• Generic discount rates were much greater than brand- name drug discount rates.
• Discount card prices at independent pharmacies reflected a greater discount from retail prices than in chain pharmacies, because of higher average retail prices at independent pharmacies.

The data in the Schneider Institutes study -- which looked at 124 different prescription drugs used frequently by the elderly and accounted for 58% of total expenditures -- indicates that PBMs' discount cards offer seniors without insurance significant savings off the price of prescriptions dispensed at retail pharmacies.

Stanley S. Wallack, Ph.D., coauthor of the study and director of the Schneider Institutes for Health Policy, concluded, "Whether they are used to give seniors immediate relief from high prescription prices or are written into a larger Medicare reform proposal, the discount card programs we studied provide meaningful savings to uninsured seniors, who unfortunately confront much higher prices than those with drug insurance coverage."

The Schneider Institutes for Health Policy at Brandeis University's Heller School for Social Policy and Management has achieved national recognition as a leading health care policy and research institution. Since its establishment in 1978, the Schneider Institutes has conducted research, policy analysis, and technical assistance on issues of organization, delivery, regulation, and financing of the U.S. and selected international health care systems. In line with its collaborative approach in addressing health care system proble ms, the institute works with other academic and health service research organizations, as well as with service delivery systems that serve as laboratories for demonstrating and testing new financial and delivery strategies. Support for research undertaken by the institute is provided by federal and state grants and contracts, corporations, and private foundations.