Wednesday, December 14, 2011

RX Cards AKA Prescription Drug Discount Cards - Are They Legit?

It seems like everywhere you look these days, there is someone trying to take advantage of the confusion over health care reform. Prescription Drug (RX) Discount cards look like one of those things. There are plans that claim to save 40% up to 80% of the retail cost of a prescription drug.
At first glance, it would seem too good to be true.
But then, charity organizations, local and even State governments are giving out these cards. If they were a scam, could they do this without causing themselves legal trouble? It all starts with the fact that prescription drugs are very expensive.
Why are prescription drugs so expensive?
Pharmaceutical companies literally spend billions of dollars developing, testing and marketing new drugs. They make up that cost by charging high prices while they own the patent before others are allowed to make a generic version.
What does that mean for your prescription cost if you have insurance?
For people who have group insurance policies with good prescription plans, you are likely being charged around 10-50% of the retail price. Your insurance provider has negotiated a discount for another 10-30% and pays the rest to the drug company for you.
So if a drug costs you $25 at the pharmacy with your health insurance plan, it likely costs your insurance company about $75 more and would cost you $125-$150 if you had to pay cash. In this case, the pharmaceutical company has discounted the prescription by about 30%, and the customer pays only about 16% of the cost.
Individual health insurance plans often come with the similar negotiated discount between them and the manufacturer. Many plans require the consumer to pay the entire amount of the cost until they have spent a certain amount on their prescriptions before starting to pitch in a percentage of the cost of Brand Name drugs. Some of these plans ONLY cover generic drugs, leaving the consumer to pick up the cost of Brand Name drugs on their own.
How do RX Cards work?
If you are one of the nearly 50 million people without any health insurance, or one of the millions more with one of the plans that doesn't cover your prescriptions, and you need a prescription that has no generic form, you are in for a large bill.
If drug companies are already discounting their prices for insurance companies, why wouldn't they do the same for someone with a discount card? On top of that, many RX Discount cards are distributed by charity organizations like United Way, Kid Fit, Red Cross, Religious Organizations and other not-for-profit associations. If the drug company is "donating" by discounting the cost for these organizations, then there is a likely tax benefit to the pharmaceutical company along with the good will that comes from supporting the charity organization. It therefore makes sense that a good RX card can be expected to save people more than the negotiated discount offered to insurance companies.
So the next time you need a prescription, try one of those cards you slipped into your wallet, just in case. If you have insurance, you can either use the discount card OR your insurance. But it could really be worth the 2 minutes it takes to be a smart consumer and ask your pharmacist these three questions:
What is the retail cost of this prescription?
What is the cost with my insurance?
What is the cost with this card?
Then use the discount that benefits you most.
At the very least, you will be grateful to your company for negotiating such a good price for you. At the most, you could legitimately save 40-80% off of what you would have paid if you hadn't bothered to ask.

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