Reverse Auction Pharmacy Selection System
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Solution Overview
Problem
The current system for prescription drug costs is inefficient, leading to higher prices for uninsured patients due to 'cost shifting' by pharmacies, and existing discount drug card programs and third-party payment methods often fail to provide guaranteed price discounts and adequate pharmacy services, resulting in undertreated patients with increased healthcare expenses and morbidity.
Innovation Solution
A method and system that facilitate the delivery of prescription drugs and services through a competitive-bid bidding process, where patients submit prescription information to a registry of pre-qualified providers, allowing for a reverse auction to determine the lowest bid, ensuring customers receive the best price and services while maintaining cost-effectiveness.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If discount drug card programs are used, then patients receive monetary discounts from pharmacies, but patients pay 100% of the price at the time of receiving medication and there is no assurance of correct discounted price or patient advocacy
Solution Approach 1:
The system performs preliminary actions by pre-negotiating price schedules with pharmacies before patients need medications. The bidding process establishes binding agreements in advance, so when patients present their prescriptions, the discounted prices are already determined and guaranteed, eliminating the need for complex real-time negotiations or payments.
Solution Approach 2:
The patent introduces a bidding service provider as an intermediary between patients and pharmacies. This intermediary conducts reverse auctions to establish pre-negotiated price schedules, then adjudicates benefits and discounts through third-party verification at the point of sale, ensuring price guarantees and patient advocacy without requiring patients to directly negotiate with pharmacies.
2Loss of energy
If third party payment programs control drug costs, then costs are reduced, but treatment options are decreased and pharmacy services are cut
Solution Approach 1:
The system dynamically adjusts price schedules through continuous reverse auctions rather than using static, rigid payment programs. This allows the system to adapt to changing market conditions, drug availability, and patient needs while maintaining cost control. The dynamic bidding process ensures treatment options remain available as pharmacies can bid to provide services at negotiated rates.
Solution Approach 2:
Instead of third-party payers controlling costs by restricting options, this patent inverts the approach by using reverse auctions where pharmacies compete to provide services at lower prices. This market-driven inversion maintains treatment versatility while achieving cost reduction through competition rather than restriction.
3Ease of manufacture
If pharmacies use cost shifting to compensate for reduced profits from insured patients, then uninsured patients pay higher prices, but this increases overall healthcare costs
Solution Approach 1:
The system enables pharmacies to serve themselves by allowing them to bid on price schedules and select which patients to serve based on profitable terms. Pharmacies can choose to participate in reverse auctions and accept only those patients whose prescriptions meet their profit requirements, eliminating the need to shift costs to uninsured patients while maintaining their profit margins.
Data Source
AI summary
Unfilled prescriptions are submitted to a registry comprising pre-qualified pharmacies for a “reverse auction” in which the pharmacies bid for the opportunity to fill the prescription. The pharmacies are allowed to bid based on price and/or offering ancillary services. The auction may also be used to bid on supplying specified pharmaceutical cognitive services. The method may also include obtaining cost comparisons with generic substitutes or similar alternative pharmaceutical products. The system may further comprise automatically requesting a review by the prescriber for a list of similar substitutes or prior-authorization for third-party payers. The winner of the reverse auction is selected by the customer.