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In the cards

Prescription discount cards are popular among consumers, but they bring fees and their partnerships with PBMs may dilute profits. Some retailers are concerned.
Mark Hamstra

Prescription discount cards represent a rapidly evolving aspect of the pharmacy ecosystem that many consumers seem to enjoy. But that can be a two-edged sword for pharmacy operators.

The cards, which are offered free to consumers, are either provided by PBMs, or are operated by other entities that have partnerships with PBMs. The cards allow consumers to take advantage of the discounts offered by PBMs, and generally charge a small fee to the retailer, which is then split between the PBM and the card provider.

“These programs appeal to patients by offering immediate savings at the pharmacy counter,” said Luke Greenwalt, VP of market access for health care technology firm IQVIA, which recently released a report on the discount card space.

The cards, which are primarily used to pay for generics, according to the IQVIA report, help consumers cover medications that do not fall under  insurance, for example, or when the card company actually offers a better price than their insurance, Greenwalt said.

They cannot be used in combination with a patient’s insurance or other benefits to obtain deeper discounts.

The IQVIA report found that prescription discount card use has increased 60% during the last five years, and discount cards accounted for 5.4% of pharmacy adjudications in 2021, up from 3.3% in 2017.

GoodRx is the largest player in the space and accounted for much of that growth, according to the report. Benecard, Inside Rx, Paramount, Sav-Rx, Scriptcycle, Scriptsave, Singlecare and United Networks of America (UNA Rx Card), are all among the dozens of other discount card programs consumers have to choose from.

While pharmacies can generate traffic and revenues by accepting the discount cards they may be risking their profit margins because of the fees they are charged, according to some retailers.

Drew Massey, director of pharmacy operations at Fruth Pharmacy, a regional operator based in Point Pleasant, W.Va., said his company decided some time ago to work with a single discount card provider because it could be difficult to turn a profit when accepting a broad range of discount cards. When the overall cost to dispense is factored in, the pharmacy can end up taking a loss on a prescription, he said.

In addition, the cards can present other challenges, such as when customers bring multiple cards to the counter and ask the pharmacist to check the discount on all of them. Each of those price checks costs the retailer a small amount, in addition to the time that it consumes.

Massey said Fruth did lose some prescription volume when it stopped accepting other discount cards.

“A noticeable amount [of prescriptions] were transferred to some competitors,” he said.

He also noted, however, that many of the customers who tend to shop around for the best deals on every prescription were probably never going to be loyal in the first place.

Fruth continues to review its options regularly, and could seek to accept more discount cards in the future if the terms were better, Massey said.

“In a lot of cases these discount cards actually make more off the prescription than the pharmacy does, which makes no sense.”
— Patrick Berryman, senior VP and chief operating officer, NCPA

Aware of the Challenges

Jim Sheninger, pharmacy strategy officer at GoodRx, said his company is aware of the hurdles that have prevented some pharmacies from accepting the cards.

The company’s business model already seeks to take some of the administrative burden off the pharmacy, he said, by combining the discounts offered from multiple PBMs in a single Rx BIN number to allow easier processing, he said.

“We know we drive traffic, and I think we're trying to put ourselves in the seat of the retailer,” Sheninger said. “How do we drive the right traffic? You can drive all the traffic you want, but if it's a losing proposition, it doesn't really matter.”

Sheninger  conceded that the company, much like most of the other pharmacy discount providers, was built with the PBMs and the customers in mind, and did not initially give much consideration to the implications for retailers.

A key consumer benefit of the GoodRx app, Sheninger said, is that it allows customers to search for the lowest-price prescriptions in their area using the app. In fact, the company was created with the goal of making it easier for consumers to compare prescription drug prices online.GoodRx is accepted at more than 70,000 pharmacies across the U.S., including Walgreens, Rite Aid, CVS, Costco and other national and regional food and drug chains.

VCRx Gives Hy-Vee a Card of Its Own

West Des Moines, Iowa-based Hy-Vee not only owns its own PBM, called Vivid Clear Rx, but also offers a prescription discount card associated with it, called VCRx. The company recently made the discount card available through a mobile app, so consumers can store their card digitally.

Jessica Ringena, president at Vivid Clear Rx, said the company has tried to make the system as retailer-friendly as possible– for example, by having a flat, predictable fee that pharmacies pay.

“In a nutshell, what you’re doing is you’re giving a cash-paying customer access to insurance-like rates without having insurance themselves,” said Ringena. “Or they might be a customer who has a very high deductible plan, or for whatever reason, they have a large cash responsibility themselves. So this allows customers to access those rates in a way that they wouldn't be able to otherwise.”

Although it is ultimately owned by Hy-Vee, a regional grocer in the Midwest, VCRx is accepted at 35,000 retailers all across the country, including many large retail pharmacy operators.

The VCRx app primarily seeks to help consumers look for the best prices and save on money on their prescriptions, Ringena said. The app also adds additional layers of functionality for the patient on top of the discounts, by giving them the ability to text and share the card with other family members anywhere in the country, for example, she explained.

“The nice thing about the app is that it gives consumers the ability to sit on their couch and just check the prices of the prescriptions they are taking,” Ringena said. “It shows the price at different retailers, so it really gives the consumers the power of choice.

“The nice thing about the app is that it gives consumers the ability to sit on their couch and just check the prices of the prescriptions they are taking.”
— Jessica Ringena, president at Vivid Clear Rx

Smarty Adds Rx to its Discount Portfolio

Among the newest entrants to the discount card market is Smarty, which has an extensive global business offering a cashback service in the ecommerce space. Its new SmartRx card is just breaking into the prescription space, said Vipin Porwal, founder and CEO at Smarty and SmartRx.“We thought that SmartRx is a natural fit for us,” he said. “We can extend the benefit of these cards to our existing users, because we've got millions of users in our database.”

While SmartRx, like other pharmacy discount programs, is free for patients to use, it is seeking to differentiate itself in the market by doubling prescription discounts and offering rebates for a variety of other medical services, Porwal said. These include rebates for checkups, telehealth visits, prescription glasses, vaccines, pet medications, and home delivery of prescriptions, for example.

“We keep on exploring more benefits that we can extend to our consumers,” Porwal said.

Similarly, GoodRx also has a premiere level, called Gold, that offers deeper discounts on some medications, free home delivery and discounted telehealth visits.

Outlook for Rx Discount Cards

Efforts to ease prescription drug costs for price-conscious consumers have approached the market from multiple angles. The cards are reliant on the discounts available through their PBM partners, while other discount initiatives, such as Mark Cuban’s CostPlus Drug Company and Amazon Pharmacy, are seeking to drive the savings themselves, said Greenwalt of IQVIA.

“Pharmacy discount cards are already changing the industry by equipping patients with price transparency and a savings option outside of traditional insurance,” Greenwalt explained. “So far this has been limited to generics, but the conversation is shifting where patients are more knowledgeable and empowered. Technology plays a role in that, but the patient as a consumer is an irrefutable driver.”

Greenwalt said he expects that during the next five to 10 years, more and more consumers will seek ways to supplement their insurance coverage, and pharmacy discount cards could play a significant role.“The industry will have to watch and see how the Inflation Reduction Act and other policies influence discount cards’ ability to expand savings to brands, including the costlier specialty medicines where net price transparency is especially critical for patients,” he said.

Ringena of Vivid Clear Rx said she thinks connectivity between payors, including discount cards, will continue to evolve.“With the rise in high deductible plans, and consumers becoming responsible for more of the out-of-pocket expenses of medical care today, I think you're going to see a lot of integrations between cash discount cards and insurance medical plans,” she said. “Basically, there will be technology that will stitch those two together.”

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