Market Challenges And Opportunities
Drug Discount Card Market Drivers:
- High Cost of Prescription Drugs: The high and continually rising cost of prescription medications is a major factor driving growth in the drug discount card market. The sticker prices of both generic and brand name drugs have increased substantially in recent years. A report from 2012 to 2017 was published by National Center for Biotechnology Information according to which the costs of oral and injectable generic drugs rose by 37% and 15% respectively. The increasing prices of prescription drugs has made medications unaffordable for many uninsured and underinsured patients. Drug discount cards provide significant savings on prescription costs, with average discounts of 10-25% on brand name drugs and 55-60% on generic drugs through these cards. The high prescription drug prices are propelling uninsured and underinsured patients to utilize drug discount cards and programs to reduce their medication costs.
- Large Uninsured and Underinsured Population: A large population of uninsured and underinsured people in the U.S. who have to pay high prices for their prescription drugs is a key driver for the drug discount card market growth. According to data provided by Kaiser Family Foundation (KFF), an independent source for health policy research, polling, and journalism, over 31 million individuals in the U.S. were uninsured in 2021. Additionally, millions are underinsured, having insurance plans with high deductibles and copays. Without adequate prescription drug coverage, the retail prices of medications can be prohibitively expensive. Drug discount cards serve the large uninsured and underinsured population by making their required prescription drugs more affordable through discounts. Discount cards can lower out-of-pocket costs by 60% for uninsured patients. The market is further driven by this large target demographic dependent on discount cards to reduce their prescription costs.
- Increasing Online Adoption of Online Platform: The increasing adoption of online platforms and m-health apps for managing healthcare is driving the uptake of digital drug discount cards. Online platforms offer free discount cards that can be downloaded digitally via web or mobile apps. The cards are easily accessible through online accounts. This provides convenience and saves time compared to using paper cards. Additionally, online platforms allow consumers to conveniently compare prescription costs between nearby pharmacies along with the discounts applicable. The adoption of e-prescriptions is also surging, which increases digital access to discount cards for medicines ordered online or delivered through mail. Such technological trends are boosting access and the use of digital discount cards for prescription savings.
- Involvement of State Governments to Provide Drug Discounts: State governments recognize the importance of ensuring affordable access to prescription medications for their citizens, particularly for those who are underinsured or lack comprehensive health coverage. By collaborating with prescription drug discount card programs, state governments can actively support their constituents in lowering their healthcare costs, which is an essential public health concern. For instance, on October 2, 2023, Governor Ned Lamont and Comptroller Sean Scanlon, Governor of Connecticut announced the launch of a prescription drug discount card program to receive savings on certain prescription drugs.
Drug Discount Card Market Restraints:
- Lack of Awareness among Key Demographics: While adoption of drug discount cards is high among the elderly, awareness and use of discount cards remains low among certain demographics like the uninsured young population who can highly benefit from these. According to data published by National Institute of Health in 2019, only 31% of the millennial population was aware of prescription discount programs. The expense of prescription drugs is a burden for young individuals with little insurance. The market potential is impacted by low knowledge among these important target groups, who may unleash tremendous growth. This emphasizes the necessity of targeted marketing and education initiatives.
- Discount Programs by Pharma Companies as well as Government Organizations: The drug discount card market growth can be limited by prescription assistance and co-pay support programs directly offered by pharmaceutical manufacturers and various state government. Most pharmaceutical companies provide free medication coupons or co-pay cards to assist patients in affording costly branded drugs. Pfizer, AbbVie, and Eli Lilly and company are among those offering such programs, helping patients with out-of-pocket costs on their brands. While beneficial, the discount offerings by drug makers reduce the value proposition of third-party discount cards for competing on branded drug savings. This can restrain patients from paying for discount card memberships. For instance, the State of California provides prescription drug discount programs for Medicare recipients to obtain their prescription drugs at a cost no higher than the Medi-Cal price for those drugs.
Drug Discount Card Market Opportunities:
- Expansion into Emerging Markets: There are significant growth opportunities for drug discount card companies in emerging markets across the Asia Pacific, Latin America, and Africa regions. Many of these countries have large underinsured and uninsured populations due to lower healthcare spending and infrastructure compared to developed regions. The out-of-pocket expenditure on drugs is high in these markets. Local startups in emerging markets are introducing innovative discount card programs and e-health platforms tailored to their markets. For instance, In Africa, m-health app providing discounted prescriptions and telehealth services. The opportunity exists for global discount card players to expand their services through partnerships with local players in these high potential emerging markets. For instance, in January 2019, The Journal of mHealth announced that eHealth Africa is included in the Journal of mHealth's Global Digital Health 100. The list includes organizations and companies that demonstrate the greatest potential to change the way healthcare is delivered.
- Discount Cards for OTC Drugs: Another opportunity is the untapped potential for discount cards targeted towards over-the-counter (OTC) medications. While discount cards traditionally provide savings on prescription drugs, they can also be applied to high-cost OTC medicines for chronic conditions. This can improve access and adherence to OTC drugs that are not covered by insurance. Partnerships with consumer healthcare companies can unlock discounts on leading OTC brands. Startups are entering this space with discount cards focused on non-prescription drugs. With consumers bearing 100% of OTC costs, discount cards in this space have high relevance and opportunity.
- Customized Services for Employers: Employers are emerging as a key opportunity area for drug discount card companies. Firms bear significant healthcare costs for employees, including prescription drug expenditures. This provides incentive for employers to seek prescription savings programs to lower benefits costs. Customized discount card options can be offered as voluntary employee benefits. Insurance providers now offer employer-focused prescription discount plans covering all employees. Strong opportunity exists for drug discount cards to tap the employer segment through benefit programs tailored to firms across industries and sizes.
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