Mail Order Savings: Overpromised, Fail to Materialize
Mail order pharmacies are owned by pharmacy benefit managers (PBMs) that promote them to health plans and plan sponsors (employers, et. al) as a means to reduce costs.
But studies have shown that health plans that encourage the use of mail order by subsidizing patient co-payments for drugs purchased from PBM-owned mail order dispensing actually pay more for drugs.
Mail order pharmacies can appear to patients to be cheaper overall than retail pharmacies. That's usually because PBMs will impose arbitrary, penalty co-pays (e.g., requiring three co-pays at retail for a 90-day supply of medicine vs. two co-pays for the same supply via mail). In other cases, PBMs prohibit community based pharmacists from filling prescriptions for medications taken regularly (or maintenance medications). Their windfall profits depend on having exclusive rights to fill patient prescriptions without competition from community pharmacies or other mail services.
Several PBM practices "behind the scenes," conspire to make promised mail order savings illusory. They can result in health plan sponsors paying more for mail order pharmacy prescriptions than they would if those prescriptions were filled at retail. Typically these hidden costs are then rolled into the rising health insurance premiums that patients bear as well.
Express Scripts ® and CVS Caremark ® are the most well-known PBMs and own the largest mail service pharmacies. Many of the smaller PBMs don't own mail order pharmacies, and will "outsource" their mail service prescriptions to the larger PBMs. In these cases, there are at least two companies seeking to make a profit from a patient's prescription.
Common cost-inflating PBM mail practices include:
Shifted co-pays—When employers and other plan sponsors agree to PBM plan designs that set lower co-pays at mail, the plan sponsor is automatically absorbing the cost of the "disappearing" co-pay. Ultimately, patients often pay for these costs in higher premiums, which continue to increase at an alarming rate.
Brand name drugs over generics—For over five years running, PBM-owned mail order pharmacies have dispensed more expensive brand name medications and fewer cost-saving generic drugs, when compared to retail pharmacies. The proportion of mail order prescriptions filled with a generic drug (known as the generic dispensing ratio or GDR) is on average 10.3—11.3 percent lower than it is at a local pharmacy. PBMs receive lucrative rebates and other revenue from brand name manufacturers for dispensing their products, which may factor into the discrepancy.
Price manipulation—PBMs maintain a variety of pricing benchmarks for medicines. They have the ability to charge a plan sponsor one amount for a prescription filled at retail and then charge a higher amount than the same drug is dispensed via mail order (a practice known as "repackaging").
Mail order waste—It is common for medications sent via mail order pharmacy to go to waste. Common reasons for this include mail order pharmacy practices such as auto-refill or auto-shipping of medicines; a reliance on providing 90-day supplies; and a distant connection to the patient. (Click here to see typical examples of mail order waste.)