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Prescription Discount Cards - Everything There is to Know to Select, Use, Save

Prescription Discount Cards - Everything There is to Know to Select, Use, Save

Responsive image The Trump Administrations’ recent announcement that it plans to tackle the problem with prescription drug prices may be a step in the right direction; time will tell. Health and Human Services Secretary Azar seems optimistic and HHS has published a guide called American Patients First that outlines the blueprint to lower drug costs.

But it is no help if you are currently struggling to pay your monthly prescription drug costs. If you find yourself without a useful drug benefit plan or if you otherwise stuck paying the high cash price for your prescription, you are not alone. There are options out that that can help you. We will discuss them here.

What about these mysterious discount coupon cards, for example? Can they help? It is time to lift the vail and find out.

What’s the catch?

Prescription discount cards are like that 1985 Dire Straits song, “Money for Nothing”. There must be a catch. You are going to give away a magical card (coupon) that I can turn around and use to save hundreds of dollars off prescription drugs? Something just sounds “off” about that tidy little arrangement.

Just look at these claims, all from the first page of a Google search:

  • “Save up to 80% at the Pharmacy”
  • “Discount Prescriptions Up To 90%”
  • “Find Your Medication Here For - Up To 90% Off At Your Pharmacy”

How is that possible? What is really going on here? How are these guys making money? Do such cards really help? Who do they help? Let's dive in.

What is the truth

If this were politics, then PolitiFact might help. The independent fact-checking group’s “Truth-o-Meter”, which rates political statements from "true" to liar-liar “pants on fire”, surprisingly would rate these claims as “mostly true.” But saving 80% on what, exactly? And where did these cards come from?


What’s in a name? Popular names, all mean the same thing:

  • Prescription discount card
  • Rx discount card
  • Cash card
  • Prescription coupon
  • Rx coupon
  • Pharmacy discount card
  • Pharmacy discount coupon
  • Pharmacy savings card
  • And on and on.

What is a prescription discount card?

At the root of all this is a simple loyalty card, a program that gets you to come back as a repeat customer and gives you something for that. These are found in about every consumer industry that you can think of. Just crack open your wallet or purse and I’m sure you will find a bevy of them you lug around every day. Like loyalty cards, some discount cards are free while others carry a small fee in exchange for some perceived value-add.

Loyalty programs have been around for decades and exist not only in the United States but are popular around the globe. In fact, there is a Wikipedia entry that suggests the earliest such program dates back to 1793 when a U.S. merchant gave copper tokens that could later be exchanged for items in a store.

Yes, we love a good bargain so why not bring something like the trillion-dollar prescription drug marketplace? It was just a matter of time.

Most urban legends place the first such prescription loyalty coupons on the shelves of 7-Eleven convenience stores dating back into the 1980s, probably sitting right next to the lottery forms. Adoption of Rx cards was slow and went mostly unnoticed until after Y2K when the Internet really started to take off. Now websites provided a lower cost way to get the word out about this new savings opportunity for prescription drugs. And boy did it take off!

How many people use prescription discount coupons?

The popularity of these programs has never been higher. It is estimated that over 500,000 pharmacy claims are processed every day using a discount coupon in over 60,000 retail pharmacies. That is 182 million each year. Wow, are they popular!

And the process is easy, too. Once you have a card you simply bring it to your pharmacy with your prescription and hand both over at the counter. The pharmacist will enter the numbers on the front of the card into their system where the store’s computer looks up the discount and a price comes through the other side. Easy peasy.

Pharmacies went along with the Rx card craze for reasons we will explore shortly.

Who uses prescription discount coupons?

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These cards are used for cash sales when insurance is not an option. A cash sale could be many things like;

  • someone without insurance
  • with insurance that does not have a drug benefit
  • with a drug benefit but their drug is not covered
  • with insurance and a covered drug but the cash price with a card is cheaper.

Collectively there are probably between 25 and 50 million people that use a discount card at least once a year.

Pharmacies Role in Coupon Programs

From the pharmacy perspective, these people are free agents. When you have insurance, you are paying based on your formulary which typically has three or four tiers and each tier has a copay (copayment or coinsurance). If my tier two drug costs me $35 I can go to any pharmacy that accepts my insurance and get the same price.

On the other hand, if I am a free agent I can also shop around and look for the best price, so pharmacies agreed to lower or discount their prices so that they may scoop up these outliers. These drugs stores looked at it as a marketing cost they paid to gain more market share.

Therein lies another common misconception, that these discounts are coming from drug manufacturers when they are most often coming from the pharmacies.

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It starts when a third party, already adjudicating (a fancy word for processing) prescription claims, that has pre-existing relationships with pharmacy chains and independent drug stores, steps in to offer a service. These firms are called Pharmacy Benefit Managers (PBM) or Pharmacy Benefit Administrators (PBA). The role they play is important as they have invested hundreds of millions of dollars creating back-end systems necessary to manage pharmacy benefits programs, prices, point-of-sale, formularies and more.

Marketers no longer had that complexity to worry about and, if they wished to start a discount service, simply needed to select one of these PBMs and, BAM(!) immediately have access to a 10s of thousands of retail pharmacies and a list of discounts for 60,000 FDA-approved medications.

Now you can see why there are so many of these cards. There is a low barrier to entry and costs are all factored into the fees.

Fees? What fees?

Yes, there are fees, but they are buried in the price you pay at the pharmacy counter. It is not broken out on your receipt, so you probably never knew they existed.

There are three things that make up the final cost to you in a cash prescription transaction:

  1. The cost of the drug itself
  2. The pharmacy’s cost to dispense the drug to you
  3. The compensatory claim fee

The PBM and pharmacy have pre-negotiated discounts for all available drugs, both brand and generic. These vary between PBMs, so where one might negotiate a better deal on Atorvastatin it might give up a little discount on Metformin. The next PBM might do it the other way around, which is why spending some time looking at various sites can help you find the one that has the best price for your drug.

All drugs are discounted off what is called the Usual & Customary (U&C) price; think of it as a list price at the pharmacy (who pays list anymore?). You might see the U&C, also known as the cash price, noted on your prescription receipt. U&C is where the term “cash card” comes in. It is industry lingo for prescription drug card (coupon, etc.)

UC price is a big markup for pharmacies and they would love to get this all the time but the reality for them is there is way too much competition.

Pharmacies do not compete for insurance customers based on price due to pre-negotiated copays. Cash paying customers are another matter altogether.

Let us look at an example to better understand all these fees and costs within a cash pay situation.

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The drug that gets the most claims using a discount card is phentermine. It is a generic diet drug that does not appear on most formularies because insurers deem it as optional or a lifestyle drug leaving most to pay the cash price (UC).

Assume the UC at one drug store for 30 37.5 MG phentermine tablets is $100. They could discount that to a marketer down to $20 and boom, 80% discount, right?

Not so fast. That is just the drug price (number 1 above). The pharmacy needs to be compensated for a dispensing fee. This includes measuring out the right number of the pills, putting them in a bottle, the cost for the bottle, printing costs for the label and the time for the technician to be there for you at check out time. Add $4.00 to the cost for a dispensing fee, though I’ve seen up to $9. Now we’re not at $24 for your phentermine order.

Then comes the dreaded compensatory fee. The PBM, pharmacy, and marketer all split this fee as compensation for their individual contributions to a successful claim.

The compensatory fee is key to saving money because they vary quite a bit from marketer to marketer. I’ve seen such fees well over $25 per prescription while others less than $5.00. (Full disclosure: Fee ranges for this card are from $0.01 (one cent) up to a maximum of $4.32 per paid claim.)

Going back to our example, that phentermine prescription could now be $29 at the low side or $49 with the other fictitious vendor. If it is the latter, that marketing company could legitimately say, “Hey, we saved you 50%!” when the customer could have paid much less had they shopped around.

Remember the PolitiFact rating scale? I think this company qualifies for the liar-liar pants on fire designation, but you be the judge!

So, yes, there are fees. But there are ways to minimize your bottom line cost.

The lesson for consumers is to seek a program that shows you prices, not meaningless discount figures. As we have seen discount numbers can be misleading while actual drug prices are more impactful. But while you are on these sites shopping prices there is another step you can do to get to an fair and accurate price.

How fresh is the design appear to you? Old-feeling website designs or something that does not work well on your smartphone are red flags that the site is out of date which means their claims of discount or pricing levels is too. Stay away.

Once you have found a website you are comfortable with, then spend a little time comparing prices. Seek out the large names you know then look at the prices at supermarkets, big box stores or independent drug stores. At times all these are competitive but many other times they are not even close.


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Back to our phentermine example. The highest price on this site recently was $31.84 at Walgreens, but if you looked through the list you’d see you could get it for about $11 at several other regional supermarkets. Same drug. One third the price.

Another example. A cash-paying customer of Gabapentin, a nearly 30-year-old generic pain reliever (Brand is Neurontin), would pay above $50 at two of the largest chain stores, but as of this writing at Publix, a southeastern regional grocery store, you can still find it under $10 (GABAPENTIN 300 MG CAPSULE, Quantity: 90).

It pays to shop around, and you really can save money with these cards; “mostly true!”

Note that most of the time you cannot call the pharmacy to confirm the price. This is a standard (and annoying) practice in the industry. But you can bring your card and your script in and ask them for a price there. If it is what you expected, tell them to proceed. If not, ask for your script back and go to the next pharmacy.

Which drugs are covered with a prescription discount coupon?

Most Rx coupon programs work with any FDA-approved drug; around 50 to 60,000. There are recent caveats, however. A dramatic rise in the abuse of certain opioids, narcotics and other medicines result in fewer pharmacies willing to accept a coupon for them as a result.

A note about Opioids

This is really a terrible problem here in the United States. Several years ago, I had a lengthy conversation with the owner of one of my favorite independent pharmacies, Lynn’s La Vega Pharmacy in Waco, TX. He sat down with me and explained that addicts were using cards to cheaply feed their habit and that it was destroying lives. While contracts require the card be accepted for all drugs, I agreed with Lynn and we stopped using them for drugs like Oxycontin and several others.

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Today, drugs like Tramadol and Gabapentin may be collateral damage in the war against opioid abuse.

Tramadol, a first-generation pain reliever that has real, but more modest, addiction component and Gabapentin, that 30-year-old, tried-and-true pain reliever, are both seeing abuse rates jump as programs designed to curtail abuse of other drugs spills over to these longtime options.

The DEA reclassified Tramadol a few years to a Schedule IV controlled substance making it harder to prescribe by providers. The move is in response to abusers moving from Oxycontin following prescription abuse for that drug and to Tramadol.

Recently, Gabapentin has come under fire as abuse for this opioid alternative have risen.

When faced with these kinds of hard choices pharmacies like Lynn’s may make a new decision based on new information. It is something to keep in mind.

How private is my information?

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Privacy is another customer safeguard that you might be wondering about. In the programs that I am familiar with the marketer does not have access to your confidential information (full name, phone, address, etc.). They will see your claim information, how much you paid and where along with other details but nothing that would allow them to reach out to you directly.

And you should keep it that way. Here’s how.

  • Do not fill out a form to have a card US Mailed to you. This is more privacy that you are freely surrendering that is not necessary. In fact, you don’t need a physical card at all.

  • Programs like these follow standard pharmacy and insurance practices. Each card has four or five sets of numbers. These numbers include the card (ID); the PBM (RxBin), the program (RxPCN) and the pharmacy network (RxGrp), all of which are required to look up and retrieve your discount.

    Most pharmacies will enter these numbers into your profile on their secure systems. Once these numbers are there you can discard your coupon and just tell the pharmacy to use your cash card that is already on file.

    Now if you lose your wallet you don’t have to worry about your name being associated with any discount program. So instead of getting a card in the mail, just print the screen the card is on, show the screen at the pharmacy counter or even write down the numbers of a piece of paper. That is all you need!

  • Never use a card that does not come with an ID. Most of the time these will be an alpha-numeric field. If a card does not come with an ID it is highly likely that the pharmacy will use your on-file telephone number, since it is unique it will work for that field in their database. Who wants to encourage more unsolicited phone calls?

Prescription Coupon Pricing: Generic and Brand Drugs

When a drug loses patent protection and generic manufacturing is permitted by the FDA, a price drop is expected. You might be surprised to know that this price drop is not always that big. This is due to rules at the FDA that bring this process along slowly through the brand to generic transition period. Typically, a limited number (one) generic manufacturer is permitted for the first year or two. A correlating pricing drop of 25% to 40% is normal but it is not until the FDA opens this up to more manufacturers that you see a truly meaningful price adjustment.

In the prescription discount card market, it is normal to see a discounted price of 50% or more off generics, many times 70, 80 or 90% off the U&C (mostly true!).

Brand drugs are a different story. Remember the PBMs negotiate discounts with the drug stores. Meanwhile, pharmacies negotiate with the manufacturers (or their distributors) for its prices. They have some extra choices for generics but not with brands so the discounts they get are more modest and the discount card discounts are smaller, more like 10-20%. That is a reality across the industry.

But if you cannot find a discount card that gets you to an affordable enough price are there other options? Of course.

Options to Rx discount cards

So, you’ve done your research. You have looked at so many websites your eyes are about to fall out of your head and you still have not found a discount for your drug that you can afford. There are a few options left.

  1. Medicare Part D. This federal program negotiates lower prescription rates on behalf of its enrollees. If you qualify for Medicare Part D this may be your best option. This program, however, is notorious for not having large formularies so drug choice is limited. Also remember you cannot use a discount card with any other form of insurance, including Medicare Part D.
  2. Veterans Administration. Veterans like me have a wonderful benefit in the VA. For all the talk about poor service, those that can see a doctor and get a prescription will find among the lowest costs for medications. It can be an arduous process but can pay off, especially if you take a maintenance medication every day for a chronic condition, like Simvastatin for cholesterol. So go find your honorable discharge papers (DD-214) and give it a shot.
  3. Patient Assistance Programs (PAP). The last time you saw a TV commercial for a drug you might have heard something at the end of the spot that sounded like, “If you cannot afford your medications Astra Zeneca may be able to help.” What is that? It is a PAP, a manufacturer’s program to help pay for an expensive drug. You must qualify to participate and most of the time that means either falling below some level on the poverty line or not having Medicare Part D or both. It is still a viable option for many. Check out the manufacturer’s site for details or Google your drug name and “prescription assistance” and see what comes up.
  4. 340(b) Programs. Of these four options to a coupon, this one may be the hardest but could pay off in a big way. Many years ago, Congress adopted something called a Rural Health Clinic. It was to address basic health needs especially for those in rural places not near major population centers where there were many health care options. Along the way they added a pharmacy component, called a 340(b) program. These pharmacies were provided with government subsidies to offset the price of prescriptions, sometimes by as much as 50%. The key is to find a Rural Health Center near you that also has a pharmacy. You will then have to be seen by its doctors and prescribed medication from its provider. Once that is done you should be able to get your drug regularly through this pharmacy. But hurry. Recently, this benefit has come under scrutiny and its future is now uncertain.


Discount drug cards can provide real and significant savings for many at the pharmacy. You just need to take a moment and to a little research and that can pay off, easily saving hundreds of dollars each year if not more. Use your best judgment and a little precaution and you will soon have more cash in your pocket!

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