Working With Discount Cards and Manufacturer Coupons

Prescription discount cards and manufacturer coupons might seem great—especially for the patient—but not everything about these products is positive from the pharmacy’s point of view.

The goal of pharmacies using prescription discount cards and manufacturer coupons is to increase the size of the patient pool the pharmacy services, but not everything is positive from the pharmacy side of the equation.

Manufacturer coupons are an incentive provided by pharmaceutical manufacturers to entice people to use their branded products. When these cards are used, pharmacists get the money back, so the financial impact is minimal—although it can take months to see the money.

Stacey Swartz, PharmD, co-owner of Neighborhood Pharmacy of Del Ray in Alexandria, Virginia, sees manufacturer coupons as a savvy opportunity for the pharmacy.

“It’s…good PR for us. It allows us to do something about the cost of someone’s prescription drugs, and we don’t really lose any money,” Swartz said. “No one wants to be known as the expensive place to get medicine, and we truly want to make the lowest cost available for our patients.”

But PR opportunity or not, not everything about the process is perfect. The coupons can be challenging to process, it takes time to call the help desk when problems arise, and there are also times where a patient may max out on coupons. These coupons become less generous over time, potentially aggravating the patient who then takes it out on the pharmacist.

Discount cards have become more popular in recent years, creating challenges for independent pharmacies.

Jesse C. Dresser, an attorney at Pine Brook, New Jersey-based healthcare law firm Frier Levitt noted that prescription discount cards typically result in more lost income to a pharmacy than manufacturer coupons.

“When a patient uses a manufacturer coupon, the pharmacy is still, generally, receiving the full price of the dispensed drug, it’s just being paid by a manufacturer instead of the patient,” he said. “On the other hand, when a prescription discount card is used, the pharmacy only receives the discounted price paid by the patient—there is no additional reimbursement.”

For example, if a patient comes into a pharmacy with a prescription for a drug that typically costs $20 if paying by cash, then uses a prescription discount card to lower the price to $10, the pharmacy only collects $10 from the patient, instead of the $20 cash price.

“[Additionally], prescription discount card companies charge pharmacies transaction fees for processing these claims,” Dresser said. “These transaction fees can be anywhere from $3 to as high as $36.”

If the transaction fee in the above scenario is $5, the pharmacy is left collecting only $5 for a drug that it typically receives $20 for.

“Sometimes, prescription discount cards can result in pharmacies dispensing drugs at or below acquisition cost, especially when taking into account the fees charged by such cards,” Dresser said. “What has become very challenging for pharmacies is that many of these cards are applied without the pharmacies’ knowledge, as they are increasingly being built into the benefit design by plans. So, rather than cover generic drugs, the plan will exclude them from coverage and simply apply a prescription discount card at the point of sale automatically.”

Pharmacies, therefore—especially independent pharmacies—have grown somewhat weary of these offerings.

With discount cards, the negotiated rates may or may not be below the pharmacy’s cost, so Swartz is very picky about the cards that Neighborhood Pharmacy will participate with.

“If I can match their price or get somewhere close to what that discount card is offering, I should be able to just provide that price to them,” Swartz says. “I think people are thinking they are getting a significant discount, but don’t understand where that discount is coming from.”

Stephanie Gernant, PharmD, assistant professor at the University of Connecticut School of Pharmacy, notes that the loss of income to network-discount cards is a serious issue for pharmacists and one that many are talking about.

She noted that pharmacy benefit managers (PBMs) teaming with tech companies is hurting independent pharmacies, explaining that PBM/Network Discount Card (NDC) use contracts work in a way where, if the pharmacy agrees to the contract, then they must accept all presented discount cards, regardless of the loss; if they don’t accept the contract, the PBM/NDC will direct the patient to take their business to a pharmacy that will.

“By accepting a network discount card…pharmacies stand to dispense some prescriptions at a net loss,” she said. “Not only are they ‘eating’ the cost of the drug, but also the operating costs, of which could be higher per unit because processing network discount cards’ claims take the pharmacist and staff’s time.” Since the discount card must be entered and processed as if the patient was presenting new insurance, it takes a significant amount of time that could and should be spent on other direct patient care services that are actually revenue generating, such as medication therapy management, immunizations, and point-of-care testing.

Manufacturer coupons and prescription discount cards can have various impacts on pharmacists and pharmacies aside from potential low profits.

“For instance, some arrangements between pharmacies and manufacturers could trigger anti-kickback statute violations where the discount the patient receives is viewed as impermissible renumeration,” Dresser explained. “Similarly, there are certain limitations when using prescription discount cards that pharmacists need to be aware of.”

Unlike manufacturer coupons, prescription discount cards cannot be used in conjunction with any type of insurance and can only be used on cash transactions. Another consideration for pharmacists is that by using the prescription discount card price, the pharmacy may lower its usual and customary price.

Oftentimes, a pharmacy’s Pharmacy Services Administration Organization (PSAO) may have contracted on behalf of their member pharmacies to participate in prescription discount programs.

“As a result, the associated transaction fees will likely be deducted from a pharmacy’s reimbursement automatically,” Dresser says. “As a primary matter, pharmacies need to diligently review their remittances received from their PSAOs and their PSAO agreements to make sure the fees they are charged for processing prescription discount card claims are reasonable and in line with their contracted agreements.”

Gernant would like to see more done to regulate the discount codes and urges pharmacists to engage in national and state professional organizations who are currently lobbying for change. Ideally, prescription discount cards and manufacturer coupons will result in increased profits to the pharmacy overall due to increased access to patients.