8 Ways Employers Benefit from Low-Cost Prescriptions

The rising cost of prescription drugs is a critical issue for employers and brokers, who are tasked with balancing the financial burden of healthcare against providing employees with essential medications. The price of prescription drugs in the United States has ballooned over the past decade, with costs rising at a rate that far outpaces inflation. 

Low-cost prescriptions can relieve some of the strain felt by both the business and its workforce. By exploring generic alternatives and negotiating better pricing through pharmacy benefit managers (PBMs), employers can help ensure that employees have access to necessary treatments, while still keeping healthcare expenses under control. As the pressure to manage healthcare costs intensifies, understanding and implementing strategies like low-cost prescriptions is as business-critical as any initiative impacting the bottom line.

What is a Low-Cost Prescription?

A low-cost prescription refers to medications that are available at a significantly reduced price compared to their brand-name or generic counterparts. These prescriptions are often the result of negotiations between pharmacy benefit managers (PBMs) and drug manufacturers, pharmacies, or through specific discount programs aimed at making medications more accessible.

Are Low-Cost Prescriptions the Same as Generic Drugs?

While low-cost prescriptions can include generic drugs and biosimilars, not all generics are low-cost. Generic drugs are identical to brand-name drugs in dosage, active ingredients, safety, strength, and performance characteristics—meaning, they work just as effectively as branded medications. Because of their simplicity, generics are easier and cheaper to produce. The key difference is that they’re typically sold at a lower price once the brand-name drug's patent expires. 

Like generics, biosimilars are copies of biologic drugs, and while they are highly similar to the original, slight differences may exist due to the complexity of production. With that in mind, biosimilars are rigorously tested to ensure the same safety and efficacy as the biologic it’s based on.

A common example is Lipitor (a brand-name drug) versus atorvastatin (the generic equivalent). While both are equally effective, Lipitor is marketed under a specific brand name, which can result in a higher cost compared to the generic version.

Low-cost prescriptions, however, may also include discounted brand-name drugs, over-the-counter (OTC) medications, or drugs available through special discount programs. The key difference is in the pricing strategy rather than the type of medication. 

Below are 8 key ways low-cost prescriptions benefit employers (and their employees).‍

‍1. Significant Savings

One of the most direct benefits for employers is the potential for significant cost savings. By opting for low-cost prescriptions, employers can reduce their overall healthcare spend, making it easier to manage budgets and allocate resources effectively. Lower prescription costs also mean less financial pressure on both the company and its employees, who may face lower copays or premiums as a result.

2. Better Access to Treatments & Medications

Low-cost prescriptions increase access to necessary medications for employees, especially those who might otherwise struggle to afford them. This is particularly beneficial for individuals with chronic conditions requiring ongoing medication therapy. When employees have easier access to affordable medications, they are more likely to adhere to their treatment plans, leading to better health outcomes and reduced absenteeism.

3. Higher Employee Satisfaction

Offering low-cost prescription options can lead to greater employee satisfaction. When employees feel supported by their employer in managing their health, it can boost morale and loyalty. Employees appreciate knowing their healthcare needs are being met without straining their finances, which can also contribute to higher retention rates.

4. Flexibility in Healthcare Planning 

Employers who incorporate low-cost prescriptions into their healthcare plans can enjoy greater flexibility in their offerings. By lowering drug costs, employers may have the ability to expand other aspects of their healthcare benefits, such as wellness programs or additional coverage options, without increasing overall spend. This flexibility can make a company’s benefits package more attractive to current and prospective employees.

5. Lower Healthcare Premiums

Low-cost prescriptions can also help in reducing overall healthcare premiums. When prescription costs are lower, insurance providers may offer more favorable premium rates, which can be passed on to both employers and employees. This not only lowers the cost of providing healthcare benefits but also makes them more sustainable in the long term.

6. Positive Public Perception

Employers that prioritize affordable healthcare, including low-cost prescriptions, can enhance their public image. Demonstrating a commitment to employee well-being and financial health can positively impact a company’s reputation, making it more attractive to potential employees, clients, and partners. A strong benefits package that includes low-cost prescription options can also be a key differentiator in competitive industries.

7. Support for Corporate Social Responsibility (CSR) Initiatives

Incorporating low-cost prescriptions into employee benefits aligns with broader corporate social responsibility (CSR) goals. By making healthcare more accessible and affordable, employers contribute to the overall well-being of their communities. This alignment with CSR initiatives can strengthen a company’s brand and foster goodwill among employees and the public.

8. Proactive Healthcare Management

Employers who offer low-cost prescriptions are taking a proactive approach to healthcare management. By ensuring that employees have access to affordable medications, employers can help prevent minor health issues from becoming more serious and costly problems. This proactive stance not only benefits the employees but also helps control long-term healthcare costs for the company.

Who is Eligible for Low-Cost Prescriptions?

Low-cost prescriptions are an accessible option for a wide range of individuals, particularly those who might otherwise struggle to afford their medications. Here’s a closer look at who is eligible and how they can make the switch:

Individuals Without Prescription Drug Coverage. If you don't have insurance that covers prescription medications, low-cost prescriptions can be a crucial lifeline. Programs like MCCPD, or pharmacy discount programs are designed specifically to help those without coverage access the medications they need at a reduced cost. By presenting a discount card at participating pharmacies, individuals can often secure significant savings on their prescriptions.

Patients with High Out-of-Pocket Costs. Even with insurance, many individuals face high out-of-pocket costs for their medications, especially if they require drugs not fully covered by their plan. For these patients, switching to low-cost alternatives—such as generics, biosimilars, or discounted brand-name medications—can greatly reduce their financial burden. Consulting with a pharmacist or healthcare provider can help identify viable, cost-effective alternatives.

Individuals Who Have Exhausted Their Insurance Allowance. Some insurance plans have annual limits on prescription drug coverage. Once this limit is reached, patients may need to pay the full price for their medications out of pocket. In these cases, low-cost prescriptions provide a more affordable option, allowing individuals to continue their necessary treatments without interruption.

Switching from Brand-Name to Generic or Alternative Medications. One of the easiest ways to lower prescription costs is to switch from brand-name drugs to generic or biosimilar or alternative medications. Generics contain the same active ingredients and are just as effective as their brand-name counterparts but are available at a fraction of the cost. Patients should discuss these options with their healthcare provider to ensure the alternative medication is suitable for their condition.

Navigating Prescription Drug Pricing with the Right PBM

Prescription drug prices are influenced by several factors, including the cost of research and development, manufacturing, and marketing effort put behind them. Additionally, the negotiation power of pharmacy benefit managers (PBMs), the specifics of insurance coverage, and the pricing strategies of pharmaceutical companies all play a role in determining the final cost of any medication or treatment.

PBMs negotiate drug prices on behalf of insurance companies, employers, and government programs. They play a significant role in determining which drugs are included in a formulary and at what price. Transparent PBMs like SmithRx aim to secure the lowest possible prices for clients, helping to keep overall healthcare costs down. Invest in a PBM partner that puts your interests first—connect with us and discover how our innovative PBM solutions can support your organization’s long-term healthcare spend and coverage goals.