Missing Price Information Hampers Usefulness of State Prescription Drug Web Sites

News Release
Feb. 13, 2008

Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—Extensive gaps in price information seriously hamper the effectiveness of state drug price comparison Web sites, according to a study released today by the Center for Studying Health System Change (HSC).

As of late 2007, 10 states had Web sites providing prescription drug prices available at retail pharmacies—Connecticut, Florida, Maryland, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York and Vermont. More states, including California, are about to launch Web sites, while a few states, including Ohio and Washington, have discontinued initiatives, according to the study.

All but one of the states use Medicaid pharmacy claims data, which often contain usual and customary price information. The usual and customary price is not the actual price paid by Medicaid for prescription drugs but generally represents a pharmacy’s retail price to a cash-paying customer, absent any discount. The clear drawback to using Medicaid claims data is that price information will only be available in cases where a pharmacy submitted a Medicaid claim containing a usual and customary price for a particular drug, according to the study.

Moreover, insured and uninsured consumers face different retail prices for their prescriptions, and the usual and customary prices posted by state price comparison initiatives generally are relevant only to the uninsured. Insured consumers typically are eligible for prescription drug prices negotiated by pharmacy benefit managers (PBMs), which use volume purchasing power to obtain lower prices. Even insured consumers who are paying completely out of pocket-because they have not yet met a deductible-typically are eligible for negotiated prices and often have access to online price tools provided by PBMs.

"Missing price information seriously limits the usefulness of existing state prescription drug Web sites," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded in part by The Robert Wood Johnson Foundation (RWJF).

Funded by the California HealthCare Foundation and RWJF, the study’s findings are detailed in a new HSC Research Brief—State Prescription Drug Price Web Sites: How Useful to Consumers?—available online at http://www.hschange.org/CONTENT/966. The study was based on a review of the 10 Web sites, including an in-depth review of the Florida site. To conduct the analysis of MyFloridaRx.com, drug price searches were conducted using two strategies—a Top 10 drug list and a set of consumer drug profiles—applied in different geographic markets: urban, suburban and rural.

Of the five consumers profiled, only one consumer would find her information needs substantially met by using MyFloridaRx.com. The four other consumers had at least one medication for which the Web site provided little or no price information, highlighting the limitations of using Medicaid claims data.

"An alternative approach—one that has been considered by policy makers in several states but adopted by none to date—is to require pharmacies to submit prescription drug price lists on a regular, frequent basis to a state agency," said HSC Senior Researcher Ha T. Tu, M.P.A., a study author along with Catherine G. Corey, M.S.P.H., an HSC research analyst.

Other key study findings include:

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.