Skip to main content

Member Insists OEBB Overpays for Prescription Drugs

October 30, 2012 -- Tamara Weaver questions why the Oregon Educators Benefit Board (OEBB) is paying more for prescription drugs through its mail order company than at Costco, her local retail pharmacy. OEBB is responsible for selecting the health plans for the majority of Oregon’s public school teachers, community colleges and state universities.
October 30, 2012

October 30, 2012 -- Tamara Weaver questions why the Oregon Educators Benefit Board (OEBB) is paying more for prescription drugs through its mail order company than at Costco, her local retail pharmacy. OEBB is responsible for selecting the health plans for the majority of Oregon’s public school teachers, community colleges and state universities.

“Our insurance cost has gone up considerably since Central Oregon Community College (where her husband, James, works) joined OEBB.” Weaver explained. “My main goal is to try and find a way for OEBB to save money.”

Recently, she paid $47.99 for a 90-day supply of her husband’s medication at Costco, without going through OEBB, and learned she could have ordered that same prescription using the 90-day option through Postal Prescription Services at a cost of $84.46. OEBB, which has a contract with this mail order company, doesn’t allow retail pharmacies to dispense a 90-day supply.

Weaver decided to submit her Costco bill to OEBB, hoping she’d be reimbursed, but was turned down. “It’s rather incredible that they won’t reimburse you if even if you are paying less than their going rate,” she said. “They should be making sure the prices they are paying are closer to market rate. I’ve always tried to save money for the insurance company. But it’s hard to do in this day and age. Even if I wanted to be a good partner and save the insurance company money, I can’t. We all need to do something about insurance and the cost of medical care.”

Explaining the price differential, OEBB administrator, Joan Kapowich, told The Lund Report that the cost of medications fluctuates frequently. The manufacturer, source prescription bottle size, strength, and formulation dispensed all contribute to the cost.

“Our carriers review the benefit design and contracted rates available at participating pharmacies and evaluate the overall potential saving across all medications,” she said. “We encourage OEBB members to evaluate all pharmacy options when considering purchasing a prescription medication due to the variation in costs across our pharmacy network. Costco is currently a participating retail pharmacy option. Members can receive a pharmacy specific estimate for an individual medication by accessing our online prescription price check tool.”

Weaver also finds it unbelievable that OEBB doesn’t allow its members to get their prescriptions refilled unless they’ve used up 75 percent of the medication. Before she and her husband went on a camping trip recently, they decided to “dump the insurance company” and just ended up pay cash.

“It was a huge hassle,” Weaver said. “Everyone I talk to says the 30-days are a nightmare.”

The 75 percent policy is in place to reduce waste, Kapowich said. “If members require a refill of their medication while they are traveling within the United States, members are urged to go to the closest available participating pharmacy. ODS (the Weaver’s carrier) customer service can assist members in locating a participating pharmacy and provide assistance with the travel refill. They frequently work with members traveling out of the country or to remote areas of the United States to ensure there is no disruption in medications therapy.”

Image for this story by Auntie P (CC BY-NC-SA 2.0) via Flickr.

Comments

Submitted by Scott Haas on Thu, 11/01/2012 - 10:01 Permalink

What is reflected in this article is the myth that mail order saves consumers and plan sponsors money. This is rarely the case as most consultants to organizations such as OEBB have little to no actual knowlege as to how retail and mail order pricing is structured and functions. Unless very specific tactics and contractual requirements are placed in practice with PBM's and mail order service providers, the disparity described in this article will be the result more times than not. The contract between a PBM and a Plan Sponsor establishes a price that is charged to the Plan Sponsor and Consumer. However, this price is not related to the cost of the claim that is paid to the dispensing pharmacy. Thus, spread pricing is the difference between what is charged to the Plan Sponsor and consumers versus what is actually paid to pharmacies. In a mail order enviroment, the level of spread pricing results in cost to members and Plan Sponsors that many times is far greater than the cost of the same drugs obtained at a retail pharmacy. Because contractual restrictions that prohibit pharmacies and employers from talking to each other, the PBMs have room to engage in spread price strategies without disclosure of the magnitude of the spread revenue to the PBM and mail order service provider to the people that actually are paying the bills. The premise of mail order pharmacy is mail order provides better pricing for the drugs they dispense. Unfortunately, this is often not the case. The irony of this situation is that often a Plan Sponsor requires less copay for a mail order claim that is HIGHER in price (when evaluated on a per unit basis).