Many overpay for prescriptions when co-pays are higher than drug prices: Study

People are often overpaying for prescription drugs when they are charged the insurance copay at the pharmacy, according to a new study from the University of Southern California.

In many cases, the researchers found a significant price difference between the patient co-pay amount and the rate insurers paid for the drugs -- and the pharmacies are allowed to keep the difference under a policy called a "claw back."

"In 2013, almost one quarter of filled pharmacy prescriptions [23 percent] involved a patient copayment that exceeded the average reimbursement paid by the insurer by more than $2.00," USC’s director of health policy and economics, Geoffrey Joyce, and his research team said in the study.

On average, customers overpaid a total of $7.69 for prescription drugs, they said.

The USC study analyzed copayment data information from 25 percent of claims on 9.5 million prescriptions in 2013.

Researchers compared this information to data from the National Average Retail Price (NARP), which contained drug prices paid by insurers, in addition to data from Optum Clinformatics, an organization that sells anonymous claims data.

Consumers overpaid by $135 million during a six-month period, they said. Generic prescription overpayments were more common, on average $7.32, but the less-common brand-name drug overpayments averaged $13.46.

The study notes that it is limited by using 2013 pricing, which could be different than current prices. The researchers also did not know the amount of reimbursements paid on each prescription, so their estimates of overpayments, based on NARP information, could be too high or too low in some cases.

Pharmacy benefit management companies, such as CVS Caremark or OptumRx, enter into contracts with pharmacies to collect patient copays, even if the copay amount exceeds the original cost of the drug.

Claw backs allow pharmacies to keep the full customer copay amounts, even if its more than the reimbursement. For example, if a patient’s copay is $10 and the PBM reimburses the pharmacy for the cost of the generic drug plus a dispensing fee for roughly $6, the PBM pockets the extra $4 paid by the patient.

Claw backs are legal, with the exception of federal programs, such as Medicare Part D, which says that patients pay the true cost of the generic drug.

Some pharmacies are under a "gag clause," which says they are not allowed to tell customers about the price difference and the fact that they would pay less for their prescriptions by not using their insurance.

Gag clauses have recently been challenged in courts and some states do not allow them.

Joyce encourages patients to shop around for the best price on prescriptions to avoid price gouging and to ask pharmacists if paying cash would be cheaper than using insurance.