Cost Savings Analysis for Otolaryngologic Medications Using Direct-to-Consumer Models

Abstract

Rapid growth of prescription medication spending has contributed to Medicare accounting for 32% of total national health spending on retail prescription medications as of 2021 [1, 2]. Out-of-pocket (OOP) costs and monthly premiums for beneficiaries remain high due to restrictions on Medicare's negotiation power [3]. In response, direct-to-consumer (DTC) approaches have evolved to increase price transparency and reduce intermediaries. By analyzing savings through DTC methods, expansion of Medicare's negotiation power to match lower prices and utilization of alternatives to traditional routes for sourcing Medicare Part D prescription medications could be employed.

Using the 10 most prescribed and expended-on medications by otolaryngologists in 2022, this study examines potential savings if three DTC methods (Mark Cuban Cost Plus Drug Company [MCCPDC], GoodRx, and SingleCare) act as procurement substitutes to traditional Medicare prescription drug sources. These three large and popular companies were specifically selected to encompass both cost-plus-pricing models (MCCPDC) and coupon-based discounts (GoodRx and SingleCare), offering diverse approaches for cost reductions. Data was utilized from DTC websites and 2022 Medicare Part D files, with analyses performed on Microsoft Excel. Medications only with singular known forms and accessible listings on at least one DTC website were included to prevent unclear delineation in the Medicare Part D database that would hinder direct comparison [4]. Quantity was held at the smallest count common among the three platforms, typically 1- or 30-count. Potential cost savings were determined by multiplying the difference of imputed monthly costs for the lowest unit price of drugs between the three companies with the total reported 2022 30-day prescriptions in Medicare Part D. 2022 Medicare prices were adjusted using the National Average Drug Acquisition Cost data to estimate 2024 prices.

When sorted by the most frequently filled prescriptions, the following 6 medications show total potential savings of $47,129,391.53 if MCCPDC, GoodRx, or SingleCare were to be used by Medicare Part D as the direct source of prescription medications: Fluticasone Propionate—Flonase ($22,450,486.03), Azelastine HCL—Optivar ($11,764,242.03), Azelastine HCL—Astelin ($11,109,460.47), Mometasone Furoate—Nasonex ($1,479,453.81), Omeprazole ($188,128.86), and Levothyroxine Sodium ($137,620.33). The following 4 medications show total potential losses of −$28,138,705.29: Ofloxacin—Floxin (−$21,137,120.77), Amoxicillin/Potassium Clavulanate (−$5,939,329.05), Azithromycin (−$538,423.70), and Cephalexin—Keflex (−$523,831.77) (Table 1).

When sorted by prescriptions accounting for the highest expenditure, the following 8 medications show total potential savings of $48,866,237.58: Fluticasone Propionate—Flonase ($22,450,486.03), Azelastine HCL—Optivar ($11,764,242.03), Azelastine HCL—Astelin ($11,109,460.47), Mometasone Furoate—Nasonex ($1,479,453.81), Dexlansoprazole ($1,171,407.62), Azelastine/Fluticasone ($565,438.43), Omeprazole ($188,128.86), and Levothyroxine Sodium ($137,620.33). The following 2 medications show total potential losses of −$27,076,449.82: Ofloxacin—Floxin (−$21,137,120.77), Amoxicillin/Potassium Clavulanate (−$5,939,329.05) (Table S1).

MCCPDC and coupon models aim to bypass administrative inefficiencies and pharmaceutical middlemen to achieve affordable prices for consumers, warranting specialty-specific investigations regarding the efficiency of choosing such DTC models [5]. Similar studies have shown annual potential savings of $141.5 million in ophthalmologic drugs, $661.8 million in oncologic drugs, $1.29 billion in urologic drugs, and $8.6 billion on medications across all primary subspecialties [3, 6-8].

Our findings suggest that potential savings under MCCPDC, GoodRx, or SingleCare procurement for some otolaryngologic medications may be offset by significant losses for others, underscoring the complexity of transitioning entirely to a direct-to-consumer model. As previous studies have discussed, the efficiencies of discount options are heterogeneous, with a lack of universal applicability across all medications [4]. In particular, our results showed that antibiotics generally were less expensive within Medicare Part D rather than DTC platforms. This discrepancy may be influenced by Medicare Part D plans leveraging various factors to receive more discounts for particular medication categories within drug distribution models, such as rebates and volume-based discounts [9].

Neither of the platforms was consistently the most affordable across the most commonly filled medications, as indicated in Table 1, with MCCPDC being the most affordable for 4 medications, GoodRx for 2 medications, and SingleCare for 4 medications. In addition, neither of the platforms was consistently the most affordable across the medications accounting for the highest spending, as indicated in Table S1, with MCCPDC being the most affordable for 3 medications, GoodRx for 2 medications, and SingleCare for 5 medications. Hence, providers should consider the hybrid integration of DTC sources for select prescription workflows and discuss these options with patients to improve adherence by reducing financial barriers [3]. Comparison between the three DTC methods was not studied as publicly available listings of DTC medications are not typically amenable to high-quality statistical analysis, warranting additional analysis to determine the most cost-effective model.

Study limitations include the exclusion of multiple-form medications due to a lack of specificity within the Medicare Part D files, and pricing calculations subject to fluctuations of time and market. Furthermore, alternative distribution companies, such as warehouse clubs (i.e., Costco and Sam's Club), may reduce costs for the consumer due to streamlined implementation challenges and procurement, but these clubs often do not allow customers to accurately view pricing online without an active membership account, complicating cost savings analysis, and were therefore excluded [10].

Analysis of DTC platforms as an alternative for Medicare Part D's sourcing of otolaryngology medications is of ever-growing importance in light of increased government spending on prescription medications. Our study suggests a multifaceted approach, where combinations of procurement methods are considered to maximize cost efficiency. Further research is needed to explore integrations of DTC platforms into Medicare's sourcing strategies.

The authors declare no conflicts of interest.