Question: Why should we care about retail drug pricing?
Your formulary drug's retail price is what determines when you enter your plan's Coverage Gap or Donut Hole. When the total retail cost of your formulary drugs (not what you paid, but the retail value), exceeds your plan's Initial Coverage Limit (for example, $4,660 in 2023 and $5,030 in 2024), you enter the Coverage Gap or Donut Hole phase of your Medicare Part D plan (where you pay 25% of the retail drug cost). So, the higher the retail drug cost, the faster you enter the Coverage Gap where you may pay more, less, or the same as what you spent before entering the Gap (depending on your drug plan).
Example of how retail drug prices can vary between Medicare plan's offered by the same company
From the chart below (Q1Rx.com/2020/FL/60505015801), you can see that several Medicare Part D plans offered by the same company have different negotiated retail drug prices for the same drug (BUPROPION HCL 75 MG TABLET (100.000 EA) (NDC: 60505015801)).
You always pay the lower cost - either retail cost or the cost-sharing. So, in the examples above, you would not pay a $43 co-pay for a drug that has a retail cost of $8.92. Instead, you would pay the lower retail price of $8.92, even though this is a Tier 3 generic drug. This is called the "lessor of" rule (you pay retail or your co-pay, whichever is less) and you can read more about this rule in our Frequently Asked Question here: Q1FAQ.com/494
Question: How does the quantity of my prescription affect my coverage cost and retail drug cost?For example, the retail cost for a quantity of 120 tablets is approximately 4x the retail cost of the 30 tablet prescription. And since you enter the Coverage Gap or Donut Hole based on the retail value of your formulary drug purchases, you should move more quickly toward the Donut Hole when you increase the quantity of your prescription.
Example 1 - higher retail cost at preferred pharmacy
Please notice that the retail drug price at the Preferred Network Pharmacy is actually higher than the retail drug price at the standard network pharmacy. However, the cost-sharing for this Tier 1 Preferred Generic is $1 at a preferred pharmacy and $10 at a standard network pharmacy. You can see that the retail cost at the standard retail pharmacy is significantly lower than the $10 co-pay, and since you never pay more than the negotiated retail price, you pay the retail price - and not the $10 co-pay.
This Medicare Part D plan also has the usage management restriction of a 30 tablet / 30 days Quantity Limit (QL). If the QL can be exceeded (for example, if the plan allows120 tablets / 30 days), the retail price increases by a factor of the QL, but the coverage cost, even for the excess amount of medication, does not change.
Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
2019 Express Scripts Medicare - Saver (PDP) (S5660-227-0)with Quantity Limit (QL) of 30 tablets per 30 days |
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Walgreens #11481 - Standard Retail Cost Sharing | Walmart Pharmacy 10-2727 - Preferred Retail Cost Sharing | |||||||||
Full Retail | Deduct- ible | Initial Coverage Phase | Cover-age Gap | Cata- strophic Coverage | Full Retail | Deduct- ible | Initial Coverage Phase | Cover- age Gap | Cata- strophic Coverage | |
Atorvastatin Calcium TAB 10MG - 30 tablets | $2.44 | $2.44 | $2.44 | $0.90 | $2.44 | $2.93 | $1.00 | $1.00 | $1.08 | $2.93 |
Atorvastatin Calcium TAB 10MG - 120 tablets | $8.08 | $8.08 | $8.08 | $2.99 | $3.40 | $8.57 | $1.00 | $1.00 | $3.17 | $3.40 |
Atorvastatin Calcium TAB 20MG - 30 tablets | $5.65 | $5.65 | $5.65 | $2.09 | $3.40 | $6.14 | $1.00 | $1.00 | $2.27 | $3.40 |
Atorvastatin Calcium TAB 20MG - 120 tablets | $20.92 | $10.00 | $10.00 | $7.74 | $3.40 | $21.41 | $1.00 | $1.00 | $7.92 | $3.40 |
In this example, we see that two preferred network pharmacies can also have different retail prices, although the cost-sharing for this Tier 2 (Generic) is the same at all preferred pharmacies.
Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
Cigna-HealthSpring Rx Secure-Essential (PDP) (S5617-290-0)with Quantity Limit of 30 tablets per 30 days |
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Walgreens #11481 - Preferred Retail Cost Sharing | Walmart Pharmacy 10-2727 - Preferred Retail Cost Sharing | |||||||||
Full Retail | Deduct- ible | Initial Coverage Phase | Cover-age Gap | Cata- strophic Coverage | Full Retail | Deduct- ible | Initial Coverage Phase | Cover- age Gap | Cata- strophic Coverage | |
Atorvastatin Calcium TAB 10MG - 30 tablets | $3.38 | $3.00 | $3.00 | $1.25 | $3.38 | $3.00 | $3.00 | $3.00 | $1.11 | $3.00 |
Atorvastatin Calcium TAB 10MG - 120 tablets | $11.53 | $3.00 | $3.00 | $4.27 | $3.40 | $8.55 | $3.00 | $3.00 | $3.16 | $3.40 |
Atorvastatin Calcium TAB 20MG - 30 tablets | $3.00 | $3.00 | $3.00 | $1.11 | $3.00 | $3.00 | $3.00 | $3.00 | $1.11 | $3.00 |
Atorvastatin Calcium TAB 20MG - 120 tablets | $9.99 | $3.00 | $3.00 | $3.70 | $3.40 | $8.55 | $3.00 | $3.00 | $3.16 | $3.40 |
Example 3 - retail drug prices vary between standard (non-preferred) network pharmacies
In this example, we do not have the usage management restriction of a Quantity Limit. So the plan member with a larger prescription (120 tablets / 30 days) would not need to file a formulary exception to receive this additional amount. The retail cost calculation provided by Medicare.gov shows the same multiple of 4 x 30-day costs.
Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
WellCare Value Script (PDP) (S4802-146-0)with No Quantity Limit |
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Walgreens #11481 - Standard Retail Cost Sharing | Walmart Pharmacy 10-2727 - Standard Retail Cost Sharing | |||||||||
Full Retail | Deduct- ible | Initial Coverage Phase | Cover-age Gap | Cata- strophic Coverage | Full Retail | Deduct- ible | Initial Coverage Phase | Cover- age Gap | Cata- strophic Coverage | |
Atorvastatin Calcium TAB 10MG - 30 tablets | $4.61 | $3.00 | $3.00 | $1.71 | $3.40 | $6.60 | $3.00 | $3.00 | $2.44 | $3.40 |
Atorvastatin Calcium TAB 10MG - 120 tablets | $16.93 | $3.00 | $3.00 | $6.26 | $3.40 | $24.90 | $3.00 | $3.00 | $9.21 | $3.40 |
Atorvastatin Calcium TAB 20MG - 30 tablets | $6.46 | $3.00 | $3.00 | $2.39 | $3.40 | $9.36 | $3.00 | $3.00 | $3.46 | $3.40 |
Atorvastatin Calcium TAB 20MG - 120 tablets | $24.63 | $3.00 | $3.00 | $9.01 | $3.40 | $35.92 | $3.00 | $3.00 | $13.29 | $3.40 |
Example 4 - higher retail prices at a preferred pharmacy, but much less than non-network pharmacies
In this example, you can see that at the preferred network pharmacy, there is a higher retail drug price, even when compared to standard pharmacies in our other examples. We also can see that the Out-of-Network retail costs are over 10x the preferred pharmacy prices. In most cases, people would not pay such high prices, and would instead pay the pharmacies "everyday low prices" without using their Medicare Part D coverage - or people could use a pharmacy Drug Discount card at this non-network pharmacy. Please note that the Medicare.gov site shows no coverage at a non-network pharmacy, except for the 37% Donut Hole discount. (This may be considering the requirement that "Part D sponsors shall provide the applicable discount for out-of-network paper claims submitted by Part D enrollees.").
Comparison of Drug Cost-Sharing Across Quantities, Phases of Coverage, and Pharmacies
AARP MedicareRx Walgreens (PDP) (S5921-383-0)with Quantity Limit of 30 tablets per 30 days |
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Walgreens #11481 - Preferred Retail Cost Sharing | Walmart Pharmacy 10-2727 - Out-of-Network Pharmacy Retail Cost Sharing | |||||||||
Full Retail | Deduct- ible | Initial Coverage Phase | Cover-age Gap | Cata- strophic Coverage | Full Retail | Deduct- ible | Initial Coverage Phase | Cover- age Gap | Cata- strophic Coverage | |
Atorvastatin Calcium TAB 10MG - 30 tablets | $9.57 | $0.00 | $0.00 | $3.54 | $3.40 | $106.40 | $106.40 | $106.40 | $39.37 | $106.40 |
Atorvastatin Calcium TAB 10MG - 120 tablets | $34.67 | $0.00 | $0.00 | $12.83 | $3.40 | $425.59 | $425.59 | $425.59 | $157.47 | $425.59 |
Atorvastatin Calcium TAB 20MG - 30 tablets | $13.86 | $0.00 | $0.00 | $5.13 | $3.40 | $152.30 | $152.30 | $152.30 | $56.35 | $152.30 |
Atorvastatin Calcium TAB 20MG - 120 tablets | $51.85 | $0.00 | $0.00 | $19.18 | $3.40 | $609.20 | $609.20 | $609.20 | $225.40 | $609.20 |