This is an updated version of an article originally posted in January 2024.
Want to save money on your prescriptions? You might have better luck buying your prescriptions without insurance.
We’ve been writing about this for years (see here and here and here), but academics seem to discover this on the regular as a surprising new fact — most recently academics at the The University of Toledo College of Pharmacy and Pharmaceutical Services.
Many people think their insurance premiums give them access to the lowest prices for prescriptions and procedures, but that is far from universally true. How do I know? I’ve found that my insurance gives me a price of $68 for a common prescription, olmesartan with HCTZ, which I can buy for $10 for cash at Mark Cuban Cost Plus Drugs. Or another prescription, lisinopril — it would cost $56.55 at my drugstore with insurance, but $13.60 on cash at Mark Cuban Cost Plus.
Academic study on buying prescriptions without insurance
One new study looked at drug spending by people who had private insurance, Medicare or were uninsured. In one conclusion, more than half of every dollar Medicare spends on drugs goes to middlemen like the pharmacy benefit manager (PBM), the new study finds. So — cut out the middlemen and go direct, and save money, the academics conclude.
The study finds, for people with Medicare Part D drug insurance, that “79% of the time Part D patients who haven’t yet met their deductible can get their drugs cheaper by paying cash than by using their insurance and paying the price ‘negotiated by their PBM.’ Keep in mind that patients often have to pay the total cost of their medications – or a copayment that in many cases is higher than what their PBM pays for the medications – until they reach their deductibles, which are determined by their Part D plan,” according to a writeup on the University of Toledo website quoting Dr. Varun Vaidya, a professor of pharmacy practice and pharmacoeconomics researcher at UToledo, the senior author of the study
The group’s analysis “found that Americans could have cumulatively saved $969 million by using the Amazon discount card and more than $1.8 billion through GoodRx,” according to a writeup on the University of Toledo website. “The average patient, Vaidya said, tends to think only of high-priced drugs when filling a prescription, believing they need to use their prescription drug coverage to even have a chance at affordability.
“’That assumption kind of insulates them from even looking into the price of the drug,” said Vaidya… ‘It makes sense that people expect insurance should be the best route. However, this research proves patients are being put in an opaque, economically inefficient system where they often end up paying a lot more than they should have.'”
The study did not explain why they did not also compare Mark Cuban Cost Plus prices. For Amazon discounts, you need to be an Amazon Prime member. With GoodRx, you need to get a discount coupon on the website. From what we hear, sometimes the GoodRx coupons are not accepted at a pharmacy, or the discounts are different from what’s on the site — or you can get a lower price simply by asking for the cash rate. For Mark Cuban Cost Plus, there’s no membership — but there is a shipping fee. They carry only generics — and not all generics are available.
Of course if you pay cash, the cost will not fall against your deductible — but maybe the savings are big enough that it doesn’t matter.
The role of pharmacy benefit managers
In another study, researchers at Johns Hopkins and the University of Utah found that PBM’s, which manage drug choice and spending for insurers, take more money out of the supply chain (read “more money out of your pocket”) than any other entities — more than the corner drugstore, more than the manufacturer.
That study by researchers at Hopkins and the University of Utah “looked at the 45 most commonly used generic medications taken by patients enrolled in a Medicare Part D pharmacy plan in 2021. They found that for every $100 spent by the Part D plans, $41 went to the PBM’s, $30 to the manufacturers, $17 to the pharmacies that dispense the drugs, and $12 to the wholesalers,” Wendell Potter, the former insurance public relations executive turned whistleblower, wrote on his Substack, Healthcare Un-covered.
“In other words, more than half of every dollar paid by Part D plans went to intermediaries (middlemen), and many of those middlemen–the big insurers that own the big PBMs–also operate Part D plans,” Potter wrote. “In fact, as the researchers noted in an October 2023 article in JAMA: “All but 29.9% of Medicare Part D dollars spent on 45 high-utilization generic drugs went to intermediary gross profit.””
The authors point out that 90% of the prescriptions Americans use are generics, which are far cheaper than brand-name drugs.
What you can do
Want to save money on prescriptions? Try these options.
Here’s our roundup on “how to save money on prescriptions.”
Mark Cuban Cost Plus Drugs has low prices on (mostly) generics.
GoodRx, but note that we have heard anecdotally that sometimes these “coupon” prices are not accepted at a given drugstore, or that you can get a lower price by asking “what’s your cash price?”
Amazon Pharmacy but you have to be an Amazon Prime member.
Note that some drugstores will not give you a cash price if they already have your insurance information on hand. So if you ask your regular drugstore “what’s the cash price?” they may not tell you.
Don’t forget Costco. We hear frequently that they have low prices. You do not have to be a Costco member to go to the Costco pharmacy, but at mine they told me that if I did get a membership, I would get a lower price than non-members.
