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Could online pharmacies also save money for retirees?

Increased competition could lead to lower drug prices

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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.
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Key Insights

  • A new study finds that direct-to-consumer drug pricing could one day rival the traditional prescription insurance model.
  • Researchers at The Ohio State University compared 33 neurologic medications sold through insurance-based pharmacies versus Mark Cuban’s Cost Plus Drug Company.
  • Though out-of-pocket costs were higher for direct purchases, total annual costs were more than four times lower than for insured drugs.

Even with Medicare, healthcare costs are a major concern for retirees, and that includes the price of prescription drugs. So, a new study from The Ohio State University offers a glimmer of hope.

The study suggests that online pharmacies offering transparent, direct-to-consumer pricing — like the Mark Cuban Cost Plus Drug Company — could one day pose stiff competition to the traditional private prescription insurance model.

Not only that, if direct-to-consumer online pharmacies provide increased competition, it might lower overall drug prices.

Published in JAMA Network Open, the research compared 2024 prices for 33 neurologic medications across two systems: those purchased through standard insurance-covered retail pharmacies, and those sold directly to consumers via Cuban’s online pharmacy.

Lower total costs

While direct-to-consumer out-of-pocket costs averaged 75% higher than insured copays and coinsurance, the study found the total annual cost of medications from Cuban’s pharmacy was 431% lower overall.

That’s because insured patients not only pay out-of-pocket for prescriptions but also shoulder monthly insurance premiums — a cost absent in the direct-purchase model.

“The difference was close to zero for a lot of these different medications,” said Dr. Amanda Gusovsky Chevalier, lead author and assistant professor at Ohio State’s College of Medicine. “The price you can get directly from a website is about the same as what patients pay through insurance — but without paying a premium that’s probably coming out of your paycheck.”

The study found that for 76% of medications, the out-of-pocket price difference between Cuban’s pharmacy and insurance-based purchases was less than $200 per year — meaning uninsured consumers could pay roughly the same for many neurologic drugs as insured patients.

Market disruption potential

Though Cost Plus listed only 33 of 79 commercially available neurologic drugs at the time of the analysis, the study’s authors say the model has significant potential to reshape prescription drug pricing.

“Total costs represent system-level spending,” said Gusovsky Chevalier. “We look at them because we want to know how much money is moving around to cover these medication costs.”

She added that the rise of online, transparent pharmacies could push traditional insurers to reassess how they price and manage prescription benefits. However, she also warned that patients using both systems could risk fragmented prescription records, increasing the potential for drug interactions or incomplete oversight.