We’re entering a new era of prescription drug access. The local pharmacy used to be the default place to fill prescriptions, but like just about everything else, technology is reshaping how we obtain our medications. According to a recent survey by my company, Prosper Insights & Analytics, more than one-third of people purchase their prescriptions online at least some of the time.
Prosper Insights & Analytics
We could see that number surge as more pharmaceutical manufacturers offer direct-to-consumer (DTC) services, which allow patients to buy prescription drugs directly from the manufacturer at a discount. The Trump administration supports this initiative and is launching TrumpRX, a website that is expected to enable consumers to fill prescriptions directly from the manufacturers.
At the same time, the pharmaceutical industry is navigating a labyrinth of compounding regulatory burdens and extreme policy uncertainty. Between the Inflation Reduction Act’s implementation, the ambiguous enforcement mechanisms of the Most Favored Nation (MFN) pricing policy, fluctuating tariffs, and more, manufacturers face the most unpredictable pricing environment in decades, if not in history.
The convergence of new distribution channels and regulatory changes is making waves in the industry, but the impact is unlikely to flow to the pharmacy counter.
“DTC, MFN, IRA and all the other acronyms are getting lots of public attention, but most of the changes are actually happening behind the scenes at pharma manufacturers’ operational levels,” said Michael Grosberg, Model N Vice President of Product Management. “Despite the political posturing, most patients won’t see a dramatic change in their costs at the pharmacy counter.”
As the market and political pressure builds, manufacturers are increasingly using AI to optimize decisions that influence patient access.
DTC Channels Will Reduce Costs… for Some Patients
Direct-to-consumer programs aren’t new, but they’re gaining momentum from political support and an increased interest in GLP-1s, which are not always covered by insurance. In DTC models, manufacturers offer consumers a significant discount off the drug’s list price. However, DTC savings are nuanced.
“DTC channels benefit patients who are under- or uninsured, such as those whose medication is not covered by their plan. However, the vast majority of Americans might still go through insurance because their copays are typically far lower than the DTC cash price,” said Grosberg. “Buying directly from a manufacturer will likely become an additional access channel, in addition to employer and government coverage options.”
For example, a drug with a $1,000 list price sold at 60% off still costs $400, substantially higher than most copays or coinsurance obligations. But for those without coverage, this greatly reduces the expense.
According to a consumer survey from healthcare technology company Softheon, one in five respondents has experienced problems with prescription drug coverage under their insurance plan. The challenge was present across all income levels. DTC offerings could increase medication access for some of these patients.
While this arrangement doesn’t transform the entire prescription drug system, it does enable pharma manufacturers to offer transparent, price-sensitive options without disrupting the contracted pricing models that govern the bulk of purchases.
AI’s Role in Patient Drug Access
AI is everywhere, including the pharmaceutical industry. The convoluted distribution ecosystem means the technology’s impact isn’t readily apparent at the pharmacy counter, but AI’s influence is at work in the background. According to Model N’s State of Revenue Report, 62% of pharma manufacturers use or plan to use GenAI.
AI-powered tools work in many revenue management functions, including:
- Enhancing demand forecasting
With AI analysis of historical sales data, contract portfolios, prescribing trends, competitor activity and other variables, manufacturers can more accurately forecast demand and adjust production and pricing strategies accordingly. This capability is especially valuable for high-growth therapies like GLP-1s. - Anticipating the impact of policy changes
AI enables pharma companies to evaluate the potential impact of policies like the IRA and MFN on revenue and operations. The insight informs go-to-market strategies, contracting decisions and portfolio management. - Modeling reimbursement scenarios
Predictive analytics can simulate how different rebate levels and pricing strategies will affect patient access and revenue across channels. The information will optimize contract structures. - Identifying revenue leakage
Automated monitoring can detect payment errors that result in revenue leakage, such as duplicate discounts in 340B programs, incorrect chargebacks, and billing errors due to formulary mismatches. - Strengthening compliance
AI-powered solutions standardize data and automate compliance reporting. The tools can also flag potential violations, such as incorrect rebate calculations. This capability helps manufacturers adhere to the increasingly burdensome regulatory requirements.
Every fine and overpayment avoided gives manufacturers more capital to invest in R&D and sustain patient assistance programs.
Optimized contracts entice insurance companies and PBMs to give medications favorable formulary placements, which means the drug is available to more patients for a lower copay or coinsurance.
When it comes to DTC, AI can show manufacturers where traditional access points break down, such as limited insurance coverage for a specific drug, revealing which medications would be most beneficial to offer as a direct purchase.
Of course, AI has uses beyond operations, such as drug discovery. R&D teams leverage the technology to identify promising compounds, predict how they will behave in the body and prioritize the candidates most likely to succeed in clinical trials. This accelerates early-stage research, contributing to faster approvals and market availability.
What’s Ahead for Patients?
Unfortunately, despite AI and DTC services, Americans won’t see their drug costs dramatically decline in the near future.
“What the patient actually pays has more to do with their insurance coverage than federal policies and list prices. AI and DTC support modest affordability benefits, but the real improvements will come from adjusting the entire drug pricing ecosystem,” said Grosberg. “Manufacturers, payers, PBMs and policymakers all have a role in making this change.”
Disclosure: The consumer sentiment study referenced above was conducted by my company, Prosper Insights & Analytics. This is the same dataset used by the National Retail Federation, and available from Amazon Web Services, Bloomberg, and the London Stock Exchange Group for economic benchmarking.
This article was originally published on Forbes.
