When it comes to shopping for prescription drugs, you likely know that generic is cheaper than brand-name. But there are other ways to save costs on pharmacy spending and, with its new tool launched Wednesday, Castlight Health hopes consumers won’t just be more cost-conscious about buying their meds but proactive when it comes to all of their medical purchases.
The San Francisco-based company, which provides employers with health cost comparison products, said its new pharmacy tool is meant to help users shop for the best prices on their prescriptions. It allows them to search across different variables, including pharmacies, mail-order, generic/brand, quantity and other factors.
According to Consumer Reports, the average American spends $708 out-of-pocket annually on pharmaceuticals, and Castlight says people make drug-related purchases three times as often as they go to the doctor — so savings on pharmacy costs aren’t insignificant. But Ethan Prater, Castlight’s vice president of product, said that while cost savings was a factor, a larger goal of the product is to encourage consumers to be more engaged when it comes to shopping for their health care services and products.
“It’s a stepping stone to broader healthcare consumerism,” he said.
Pharmaceuticals comprise just 15 percent of what employers pay in healthcare costs. But if being mindful about drug costs helps employees become more savvy about general health care costs, the savings could be meaningful to employers and employees.
As health care costs rise and employers shift to high-deductible health plans that require their employees to bear a greater share of health care costs, companies like Castlight are trying to boost transparency and bring a new wave of consumerism to health care. Castlight, which has raised $181 million in venture capital and is believed by many to be the next digital health company to go public, is a leader in this space. But other companies addressing transparency issues in healthcare include ClearCost Health, Clear Health Costs and HealthInReach.
With Castlight’s mobile app, users can search from their doctor’s office to see if a less expensive therapeutic alternative (or drug in the same class) exists for a medication recommended by a doctor. Other savings could come from mail-order sites or pill-splitting, Prater said. While not all employers support the practice of buying larger, possibly cheaper, doses of a medication and then splitting it into the prescribed amount, Prater said that for those that do, Castlight provides the option. The tool also alerts users when it spots opportunities for cost savings.
Castlight, which counts companies like ConAgra (s CAG) as customers, says it works with employers who collectively cover 3.7 million people.