Interesting how Amazon uses “Automated Discounts” to get around “Usual and Customary” prices. Typically, pharmacies only get reimbursed by PBMs (middlemen between insurers, manufacturers, and pharmacies) up to a maximum of of their U&C price so their incentive is to set it really high in order to maximize reimbursement rates.<p>Amazon’s GoodRX-style discount cards gets around this by basically charging a spread over the reimbursement and kicking back some portion of the spread to the PBMs. By making the price an “Automated Discount” to some number between the U&C price and the reimbursement price, Amazon can charge less without impacting their reimbursement rates while paying the PBMs off.<p>This is a huge simplification of the US’s broken pharmaceutical system, obviously. One example of the nuances here is that Amazon is probably not able to set the price of the discounted drug.<p>Some reading: <a href="https://www.drugchannels.net/2020/08/how-goodrx-profits-from-our-broken.html" rel="nofollow noreferrer">https://www.drugchannels.net/2020/08/how-goodrx-profits-from...</a>
One of my kids was on a medication that was super expensive, unless you used a coupon. The doctor didn’t tell us anything about a coupon, we had to find out from the people working at the pharmacy when we went to pick it up. It turned out to be quite a bit of work to find the coupon and print one off, but it greatly slashed the price.
This is a good thing, regardless of whatever else Amazon is doing.<p>Large organizations do not monolithically fit one description or judgment. Amazon does lots of other questionable or downright malicious things. This is not one of those.
Several people have raised the point that if the discounts are automatic why not just change the pricing? Pharmaceutical pricing and a lot of healthcare pricing in general are strange in the sense that they are organized to capture what certain plans/institutions will pay. If there is a plan out there that says "we will pay $540 for a month of lifesaviex" you are going to see prices at $540 or above to capture that even if in other contexts some patients are getting it at $35 a month. There is a lot to potentially discuss about that but cherry picking one interesting thing... Many very large employer plans are administrated by the insurance companies names you are familiar with, Anthem, United, etc. However the details of the plan, including reimbursements, are actually set by people at the employer, not the plan. There is someone in the giant beauracracy at these companies who compiles/edits/approves a massive spreadsheet and out into the market it goes. Mistakes are common.<p>In a similar vein, some poorly thought out reimbursement rate setting by CMS/HHS related to drug testing wasted at least 216 million dollars. A virtual cottage industry sprung up around it while it was in effect. It was not an isolated incident.<p><a href="https://oig.hhs.gov/oas/reports/region9/92103006.pdf" rel="nofollow noreferrer">https://oig.hhs.gov/oas/reports/region9/92103006.pdf</a>
I've been wondering why Mark Cuban's drug company - which takes a cost plus model, doesn't make insulin. It seems like a market that is likely growing, effectively has no substitutes, and you need it to live. Is it hard to manufacture? It's been around for 50+ years so I'd think they can make it efficiently by now, but perhaps not?<p>Edit - did a bunch more digging after posting this. Looks like they gave up? <a href="https://www.beckershospitalreview.com/pharmacy/cost-plus-drugs-ends-plan-to-sell-insulin.html" rel="nofollow noreferrer">https://www.beckershospitalreview.com/pharmacy/cost-plus-dru...</a>
If the discount is "automatic", how is this different than "we simply lowered the price"?<p>Is the discount conditional on something that's not mentioned in the article?
I consider the idea of applying discounts for medical products amoral customer hostile actions.<p>Who wins? The people who are granted the knowledge or seek the knowledge themselves. The sellers of these medical products too because they get to advertise the coupon applied price of their product and...<p>Who loses? The people who are not granted the knowledge or don't seek out the knowledge. Perhaps they don't know the system is a game and there ways of circumventing prices. Perhaps they're desperate for the life giving medication.<p>Overall USA's medical industry is very opaque and anti-competitive in general. It really really sucks. I'd love it if we rearranged the system such that capitalistic market forces could do its work, such as letting consumers price shop. Its very frustrating.