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Marketplace Morning Report

The promise and problems of drug-finding apps

Dan Gorenstein Nov 12, 2015
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Nearly half of all employees who get insurance through work now face deductibles of $1,000 or more.

That means more and more of us pay for prescription drugs out of our own pockets.

A recent poll from the Kaiser Family Foundation found nearly eight out of 10 Americans believe keeping drugs affordable is the nation’s top health priority – and Republican voters see that as more pressing than repealing Obamacare.

A growing number of companies say one solution to spending less may be in the palm of our hands – smartphone apps that help find consumer find cheap prices. But they could end up driving prices higher, some experts said.

A.J. Loiacono, with the pharmacy benefit software company Truveris, recently gave a demo of his company’s app OneRx to the Philadelphia Federation of Teachers.

He looked up the cost of a common antibiotic in the city.

“You could see there is a wide disparity in the prices where it goes down from $20 to a high for $61,” he said.  “If we look at the map, Walgreens about two to three blocks away is the lowest price.”

OneRx is one of about a dozen apps that promises to help consumers get the best deals on prescription drugs. Beyond comparison shopping, the service also offer consumers retail discounts and coupons from drug makers. More than 3 million people use GoodRx, the largest of these apps every month.

It can be a useful tool, but it’s a little bit more squishy that it might appear,” said Lisa Gill, an editor at Consumer Reports.

Gill preached caution after dispatching a team of secret shoppers to test the reliability of the apps. Sometimes, she said, the apps were wrong about prices.

“The apps might tell you that we can guarantee these prices, but it’s not a promise,” she said. 

Another knock on this software is that it promotes drug maker coupons. Clearly, some consumers benefit because it’s either the coupons or go without the drug.

“But it’s also like a wolf’s in sheep’s clothing,” said Northwestern economist Leemore Dafny.

She said what makes coupons pernicious is that patients avoid their share of a pricey drug, but the insurer still pays its share. In other words, we consumers get around the blockade insurers set up – high co-pays – and drug makers are off to the bank.

“I assure you that pharmaceutical companies are not issuing these coupons because they are reducing revenue. Return on investment on these things is 4-6 times spending,” she said.

The real problem, said Dafny, is coupons undermine insurers leverage to negotiate lower prices.

And the more money insurers spend this year on these expensive drugs, the higher our premiums will be next year. 

As this new drug app industry takes off, it likely means more coupons getting redeemed. 

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