Employees buy drugs for zero

Dr. Kalies

As America agonizes about how to adapt to the unending complexities of Obamacare, a startup company from Oshkosh, Wisconsin has cracked through with elegant simplicity on another piece of real reform, transparency for ordering drugs.

BidRx has done for drug purchasing what Amazon did for purchasing books, that is to make it easy to understand and easy to order.

Here’s how it works. My company signs up for Bid RX services and agrees to pay a monthly fee per life in our self-insured health plan. Employee sits down with his or her primary care doctor and they decide on a statin regimen to lower cholesterol.

Lipitor, the statin made well know through a massive Pfizer ad budget, pops to mind of patient and doctor. They pull up the BidRx screen with patient and health plan information pre-loaded. It lists Lipitor at $535.74 per month. Ouch.

But the site also displays all the statin generics for Lipitor, with Simvastatin at the top of the list. It has been tested for equivalency for most patients. Price delivered to your mail box the next day: $7.37 for a month’s supply.

A range of pharmacies had bid through the BidRx system to sell at that price. The competition is among the retailers.

It’s such a good deal that they agree to go with the generic. Doctor punches button, and order goes to pharmacy for next-day delivery.

In some cases, employers offer a $10 coupon with each drug order, so employee pays zero. Employer, which has just saved major dollars, is billed for the $7.37.

Founder, Ralph Kalies, who holds a PhD in pharmacology, said, “If you shop wisely, you (the employee) can almost always buy your drugs for zero.”
BidRx now serves 2.5 million employees and is growing fast. The company estimates that it can lower an employer’s drug costs by 40% to 60%. I asked Kalies to pull up a specialty drug for arthritis, for which we were paying $7000 per month for an employee. One retailer offered to fulfill that order for $518.54 per month.

“It’s a very disruptive technology,” said Kalies.

That technology is what is known in other circles as a real marketplace. About time.

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  • old baldy

    John:

    I hate to break this to you, but most if not all heath plans require the generic if it is proven as effective as the brand name. My employer is always switching plans to lower cost. All of the time in the last 20+ years generics have been required if available. Why is this new to anyone?

    • Anonymous

      BidRx is no just about switching from brands to generics. It gets better bids through auction on the generics too and on the branded drugs if they need to be used.

  • WiscoRx

    This is not news nor is Kalies system unique in any way.

    The law in Wisconsin requires that pharmacies offer a generic prescription if one exists.

    Indeed, over 83% of prescriptions in Wisconsin are now filled with a generic, and that figure is in line with most other states. Its also why most manufacturers are aware of the “patent cliff” that presents itself once a branded product reaches its patent exclusivity expiry.

    I question why John’s well reasoned philosophy on health-care containment: provide free-market incentives for rational choices based on transparent quality and cost measures, does not apply to pharmaceuticals and to pharmaceutical care. To base a drug product selection solely on the commodity price of a drug while ignoring the quality of pharmacy services and the appropriateness of that medicine for the individual needs of the patient. As medical technology increasingly understands individual response to medical intervention, including personalized medicine, the cost/commodity model shows its weakness as outdated. We can do better

    • Anonymous

      As I understand it, the BidRx model builds in drug equivalency in terms of effectiveness. And the drug is still prescribed by a doctor. So the value is there for price and quality.

  • Dan Eastman

    Any ability to lower employer health care costs while preserving health benefits for the employee is helpful. Market efficiencies are good. Thanks, John!

    • Anonymous

      Just got an e-mail from Jim Edwards, a major benefits consultant in Montana. He represents 70 community banks with 2000 employees, and, through an drug auction model, was able to drop their total spend from $1.86 million in 2011 to $1.59 million. – even though the number of prescriptions was up for that year. Who knew? A marketplace solution works.

      Not incidentally, lower prices means more access to drug therapies, and that means better health. Good prices are not just about savings; it’s also about better outcomes.