Experts Weigh Pros, Cons of DTC Pharmacy Models for Patients, Manufacturers

Jennifer Graff, PharmD, of Innov8 Health Policy, and Brian Reid, MS, of Reid Strategic, discuss the advantages and drawbacks of direct-to-consumer (DTC) pharmacy models for patients and manufacturers.

They note that DTC models can offer patients faster, more convenient access to medications while allowing manufacturers to engage more directly with consumers. However, these models may raise out-of-pocket costs for patients, the experts warn.

Learn more about the impact of DTC models here.

This transcript has been lightly edited for clarity; captions were auto-generated.

Transcript

What key advantages do DTC models offer to consumers and manufacturers, and what are their most significant risks or limitations?

Graff: The biggest benefit of these DTC models is [they] reduce the friction for any patient trying to receive care. It solves the problem and the multiple months in their treatment journey to receive care for their condition.

Now, the biggest challenge will also be, how much does this direct-to-consumer, which is outside of the traditional health market, approach create more friction for patients? As I think about this, I think about the way I go grocery shopping. I prefer Instacart, having it delivered right at my home. Whereas, if we think back many decades ago, my grandmother was willing to shop at the butcher, the baker, and find multiple other sources for her groceries.

Many of us don't have time and/or the resources to manage all of those activities, so the groups and the patients that are most likely to benefit from the DTC models are going to be those that are engaged, where the friction cost to engage in the DTC model is less than the friction cost of receiving that care through their normal health care coverage.

This really means that patients may be paying more out of pocket. The costs that they're paying as a consumer don't come out of their total out-of-pocket network or deductible costs. It's almost inflating the costs above and beyond what they might be seeing through employer-sponsored coverage.

This changes as you think of 3 different groups. For the manufacturer, what this allows is more direct communication with the end user. For anyone with a product, the closer you can get to the consumer, the better your products and your services and wraparound care can be. By creating these direct-to-consumer models, they're able to help ensure that medication adherence, that full support services, whether it's migraine, whether it's for respiratory conditions, whether it's for weight loss or diabetes, that these individuals have all those support services that are needed to have a successful outcome.

It also cuts out the challenge that the difference between the list price and the direct-to-consumer price looks pretty similar to the net prices that many health plans and/or unions are already receiving. It really has far less impact on the manufacturer and allows them to get much closer to the individual and help ensure a successful health outcome.

Reid: Starting with the consumer, the attraction here is the ability to receive a medicine without having to go through all of the hoops of dealing with insurance, and we can get into, in a little bit, kind of what some of those hoops are. But there are a lot of medicines right now that are simply excluded from your health insurance altogether. There's no way, shape, or form in which the insurance company is going to underwrite that particular medicine.

There are also medicines where the hoops, the utilization management hoops, that have to be jumped through, are relatively onerous. Offering patients another way through that is incredibly attractive. Now, it may not be right for all patients and all drugs in all circumstances, but you can certainly imagine that there's a class of outliers here for whom this is going to be important.

In fact, I've got a friend who, last year, needed a specific branded medicine in a competitive class. It was about $1000 a month. He couldn't afford the $1000 a month, and so we had to go to a different medicine that was less effective. There was a cost to his health, and if he were able to get that medicine direct-to-consumer at something close to a net price, say, $300 or $400, it would have meant some belt tightening, but he would have had this opportunity to purchase a medicine at a price that maybe he could have afforded, and there would have been a health benefit at the back end there.

There's this potential benefit to consumers, especially on the edge. I think one of the things we know about health care in the United States is that those outliers are actually where a lot of the broader problems lie. That's part of the advantage for the consumer.

For the manufacturer, there are a couple of advantages. One is you no longer have a third party sitting in the middle that's going to determine whether or not a patient's going to get the medicine they need. That health insurance and the benefit design, sometimes that works great in terms of getting medicines directly to patients, but sometimes it's an impediment. Manufacturers would benefit from having that impediment removed, and we've seen this play out in obesity.

The other advantage for manufacturers is it gives them the opportunity to treat the patient who's receiving the medicine as a consumer in the same way that Nordstrom treats their customers as customers, or Apple treats their customers as customers. In the health care system, if you go to almost anyone in the health care system and say, "Who is your customer?" With the exception maybe of some folks on the clinical side, they'll name someone who is not the patient. What this does is it gives manufacturers an opportunity to treat the patient like a customer.

I think, especially when you look at the kind of fully integrated farm-to-table, where you get telehealth, you get the direct-to-consumer drug dispensing, it's an opportunity for manufacturers to really kind of curate this entire experience in a way that's going to make the end user really feel like they haven't fallen through any cracks, that they've gotten exactly what they needed at every step of the process. The reality is we don't get that in health care in pretty much any other way. So, there's this opportunity to deliver an experience that, heretofore, has been really hard to deliver.