Breaking Open the Black Box of Medication Pricing

Dec 1, 2020


Alto Pharmacy

Anna left her doctor’s office with a glimmer of hope. For months, Anna had been struggling with digestive issues and now her doctor had suggested they try a promising new medication. Finally, she thought, maybe this new medication could provide some relief and her life could return to normal. But when Anna arrived at her pharmacy, she was shocked to discover the medication would cost $400 per month! The pharmacist at the counter explained that if she couldn’t afford the copay, she would need to call her insurance or her doctor to “figure it out.” Frustrated and overwhelmed, Anna left the pharmacy empty-handed and with the distinct feeling that healthcare had been designed to work against her.

Unfortunately, Anna is not alone in encountering obstacles that prevent her from getting the medication she needs. From the moment we leave the doctor’s office, we are thrust into a maddening, depersonalized system that feels like a big black box. We are left to navigate it all on our own, especially when it comes to medication pricing. 1 in 3 Americans admit that they aren’t taking the medication they need because of cost. This is not only harmful to our long term health as patients, but also a devastating cost to our country. It is estimated that there are 125,000 avoidable deaths per year and nearly $300 billion in downstream medical costs due medication non-adherence. You may have heard stories of diabetic patients who, faced with climbing insulin costs, died from skipping doses or resorting to cheaper alternatives. For these patients and their families, getting the right medication is an issue of life or death. And for many like Anna, it’s, at the very least, very high stakes.

The Problem

Today, medication pricing is set by multiple stakeholders in a process that is entirely hidden from patients and doctors:

  • Your employer contracts with a pharmacy benefits manager (or “PBM”, like Caremark, Express Scripts, etc.) whose job is to determine which medications should be covered or not under your insurance plan (even down to the exact dosage and brand that your doctor prescribes).

  • The PBM negotiates with the drug manufacturers to agree upon a specific price to charge the employer for a medication, the remaining copay for patients, and the PBM’s hefty cut for administering the service. It’s not hard to imagine how commercial incentives might color decisions on which medications are covered and how they are priced.

  • Drug manufacturers also offer copay assistance programs for select medications, with varying eligibility criteria, but these are marketed primarily through doctors, meaning patients often don’t know these assistance programs exist or if they qualify.

Today, none of this data is transparent or shared. These parties (doctors, drug manufacturers, PBMs) do not have the incentives nor the technology in place to coordinate with one another to act in the patient’s best interest. Drug manufacturers and pharmacies get paid by the medications dispensed, doctors get paid by the appointment/procedure, and PBMs get paid through taking a hefty cut of the negotiated medication price. These parties are naturally incentivized to pursue a path that delivers the highest financial return with the least amount of effort. Sitting in the center of this web, pharmacies are uniquely positioned to coordinate the best outcome for the patient. Traditional retail pharmacies, however, don’t have access to technology solutions that would easily bridge the gap between insurer, manufacturer and physician. It’s no wonder medication prices continue to climb and the process of getting medication remains so inefficient.

At Alto, we asked ourselves, “What if every patient could have a pharmacy expert on standby to help him/her navigate the complex world of medication pricing?”

Our Solution

We believe that pharmacy’s role is to make the process work around patients, rather than asking patients to learn how to work the system. So we built a modern pharmacy software platform that enables our Alto pharmacists, billing specialists and patient advocates to coordinate between doctors and insurance companies to ensure patients have clear choices and transparency on medication pricing.

Alto is the first pharmacy to proactively:

  • Show patients the price of a medication both with and without insurance, within minutes of receiving their prescription. These prices matter because sometimes the price without insurance is actually cheaper.

  • Match patients with savings and copay assistance programs offered through drug manufacturers. Often, patients and doctors don’t have time to manually keep track of these programs, so our service automatically searches for eligible programs.

  • Help patients and doctors navigate the complexities of insurance, whether by identifying an alternative medication that is more affordable under the patient’s plan or helping to petition insurance to cover the medication (a process called Prior Authorization). Compiling all the paperwork and medical history data required by these insurance processes takes up valuable time from doctors (estimated at 20 hours of work per week per doctor). Our technology automates this process so patients can quickly get access to the medications they need.

Here’s what all this means for a patient like Anna:

When Anna told her doctor about the expensive copay, her doctor sent the prescription to Alto. Anna’s doctor knew that Alto would help with the paperwork needed to petition insurance to cover a patient’s medication. Within a few hours, Anna received a notification from Alto that they’d worked with her doctor to start the process with her insurance. In the meantime, Alto had matched her with a program from the drug manufacturer that would reduce her copay so she could get started on her therapy right away. When her first Alto package was delivered that evening, Anna regained that early glimmer of hope, relieved to have the Alto team in her corner. Within days, Anna’s insurance approved the coverage, and Anna has been able to stay on the medication, better managing her symptoms (and her medication costs) for over a year now. Anna has been able to focus on her health and feel some semblance of her new “normal.”

Since Alto Pharmacy opened four years ago, we’ve had the privilege to help hundreds of thousands of patients and physicians. By harnessing the power of our pharmacy team and our technology, patients get access to the best medications, at the best possible prices, delivered to their home the same day. 

We are proud to be cracking open the black box surrounding medication pricing and giving Alto patients a new level of transparency and control in their health journey. And we are hopeful that with increased awareness and patient advocacy, systemic changes are on the way that will help make medications more accessible and affordable for everyone.

Monica Tran has led the Product and Design team at Alto for two years, helping build a suite of products for pharmacists, physicians and patients that allows Alto to break down barriers to medication access and transform the pharmacy experience. She recently transitioned into a leadership development and coaching role, helping to scale Alto’s organization, values and patient experience.

Believe in a better pharmacy

Believe in a better pharmacy

Believe in a better pharmacy