Economics of my prescription...
February 7, 2015 3:37 PM   Subscribe

How is my prescription for a $1500 prescribed medicine being paid for? Details inside...

I have a mild case of reoccurring eczema, and my doctor prescribed an ointment called Vanos. My insurance doesn't cover it, because it is considered a cosmetic need, not a medical need. Without insurance, it was going to cost $1500 a tube at CVS or Walgreens. My doctor set me up with an online company called Philidor RX Services, and I was able to get the Vanos from them for $35 a tube. They always asked for my insurance information, but my insurance never covered anything. I have verified this with my insurance company.

The last time I called Philidor and got a refill, they told me there was no copay, and I received this supposed $1500 ointment for free. That was when I checked with my insurance company and verified that they were not paying Philidor anything for these prescriptions. I researched Philidor online, but found out very little about them.

I have private insurance (not employee provided), am not on medicare or medicaid, and do not get any tax breaks from the affordable care act exchanges.

How is this prescription getting paid for? I guess I shouldn't look a gift horse in the mouth; I'm just curious.
posted by tomjoadsghost to Health & Fitness (6 answers total) 5 users marked this as a favorite
Prescription discounts/coupons are a thing - in short, pharmaceutical companies decrease the cost to people without an insurance benefit so that they can increase the cost to people with an insurance benefit. A quick Google search indicated there is at least one such program for Vanos. I'm more familiar with these programs when there's still a residual cost to the patient. Perhaps Vanos has decided that the difference between collecting $35 on a $1500 prescription is not worth the effort compared to collecting $0 on a $1500 prescription when they can simply focus their effort on charging an insurance company $1500 (or some high number) on a $1500 prescription. In short, Vanos is not trying to make money off of you - they're trying to get the drug used more frequently so that they can make money off of people with more comprehensive medical coverage.
posted by saeculorum at 3:56 PM on February 7, 2015 [4 favorites]

"List price" means nothing in health care. It is pretty usual to see insurance reimbursement s that are 10% of the billed amount. It's the contract price between the insurance company and the vendor that counts. So, one possible explanation is that your drug insurance company has a contract price of $35, and it's a 4th tier drug meaning they don't pay, you do. However, if that was the case, I would have thought you insurance co would have explained it to you when you spoke to them. I would also think if the drug insurance co was involved, you would be getting EOBs.
posted by SemiSalt at 4:23 PM on February 7, 2015

The maker of Vanos has a site explaining the terms of their $35 savings program. I suspect you could have also received the Vanos from CVS or Walgreens for $35 if you presented the appropriate paperwork.

The .1% formulation of Vanos is now available as a generic, so Vanos is most likely trying to get people to keeping buying their stock when it's not covered by insurance and they can't afford list price.

It costs Vanos nowhere near $1500 to manufacture the drug. That's the list price so they can try and bill as much as possible for each tube depending on who's buying - so don't feel bad about your $35 tube (although I'm not entirely sure why the second tube was free).
posted by eschatfische at 4:33 PM on February 7, 2015 [2 favorites]

The relevant part of Vanos's site is this:

This offer is not valid for prescriptions reimbursed in whole or in part by Medicaid, Medicare, federal or state programs (including any state prescription drug programs).

So, if they are getting paid by one of those, list price.

How is this prescription getting paid for?

The same way those free samples at the doctors office are getting paid for. The drug company pays for it as part of their marketing. They want your doctor to be familiar with how this drug works and happy with the results their patients are getting so the doctor will prescribe it to patients they get more money from (whatever the source) than you.

There is no need to feel bad about this or feel like it's "charity", any more than you would feel bad about the "free" phone from your cell phone provider.
posted by yohko at 5:08 PM on February 7, 2015

The Pharmacy Benefit Management industry is part of the larger picture behind how your prescription was covered.
posted by ndfine at 7:59 AM on February 8, 2015

The insurance companies who do cover this drug may not be paying $1500 for it either; they may have negotiated prices.

This podcast from Planet Money is a few years old, but covers how prescription coupons work.

This isn't exactly what is going on in your case. My best guess is that Philidor was hired by the drug company to facilitate a discount program for this drug. Why you're not being charged anything is something of a mystery to me, though.
posted by jeoc at 12:33 PM on February 8, 2015

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