Reverse Auction Pharmacy Selection for Drug Cost Reduction

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Solution Overview

Problem

The current healthcare system faces high costs for prescription drugs, particularly for uninsured individuals, due to 'cost shifting' by pharmacies and inadequate access to discounted prices, leading to undertreated patients with increased morbidity and mortality, and perverse incentives that prioritize profitability over customer needs.

Innovation Solution

A method involving a competitive-bid bidding service provider selection process that allows customers to submit unfilled prescription information, which is then transferred to pre-qualified providers for interactive bidding, enabling customers to select the lowest bid and potentially receive coupons for alternative products, thereby reducing costs and increasing access to pharmacy services.

Engineering Contradictions & Design Principles

VSEngineering 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 lack assurance of correct discounted pricing

Engineering Contradiction:

Improveassurance of correct discounted priceVSAvoidpatient payment process

Core Design Contradiction:

ReliabilityVSEase of operation

Solution Approach 1:

The patent introduces a third-party payment program as an intermediary between patients and pharmacies. This intermediary adjudicates benefits and discounts, verifies pricing, and ensures patients receive correct discounted prices. The third party negotiates pre-negotiated price schedules with pharmacies and validates transactions, eliminating the reliability issues of direct discount card programs while maintaining ease of operation through automated benefit adjudication.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Quantity of substance

If third party payment programs control drug costs, then costs are reduced, but treatment options are decreased and pharmacy services are cut

Engineering Contradiction:

Improvedrug cost controlVSAvoidtreatment options

Core Design Contradiction:

Quantity of substanceVSAdaptability or versatility

Solution Approach 1:

The patent implements dynamic formulary management where the third-party payment program continuously negotiates and updates pre-negotiated price schedules with multiple pharmacies and pharmaceutical manufacturers. This dynamic approach allows treatment options to expand as new drugs and pharmacies are added to the network, while cost control is maintained through ongoing negotiation of pricing terms. The system adapts to market changes rather than imposing static restrictions.

Inventive Principle:

Principle #15Dynamics

Solution Approach 2:

The patent segments the pharmacy network into multiple pre-negotiated price schedule tiers, allowing patients access to different levels of pharmacy services and drug options. By creating multiple negotiated agreements with different pharmacies offering different service levels and price points, the system provides versatile treatment options while maintaining cost control through the structured pre-negotiated pricing framework.

Inventive Principle:

Principle #1Segmentation

3Loss of energy

If pharmacies implement cost shifting, then profits from insured patients are maintained, but uninsured patients pay higher prices

Engineering Contradiction:

Improvepharmacy profit marginVSAvoiduninsured patient cost burden

Core Design Contradiction:

Loss of energyVSObject-affected harmful factors

Solution Approach 1:

The patent enables uninsured patients to access pre-negotiated discounted prices directly through the third-party payment program without requiring insurance coverage. The system allows patients to self-select from multiple pre-negotiated price schedules offered by different pharmacies, obtaining discounted pricing based on their ability to pay rather than insurance status. This eliminates cost shifting by allowing pharmacies to charge discounted rates directly to uninsured patients who can afford them.

Inventive Principle:

Principle #25Self-service

4Loss of information

If prescribers and customers lack information participation, then pharmacoeconomic discussions are limited, but price increases by manufacturers continue

Engineering Contradiction:

Improvepharmacoeconomic information accessVSAvoidprescription drug price increases

Core Design Contradiction:

Loss of informationVSStress or pressure

Solution Approach 1:

The patent establishes feedback loops where the third-party payment program collects and analyzes pharmacoeconomic data from multiple sources including pharmacy transactions, manufacturer pricing, and patient outcomes. This information is fed back to prescribers, patients, and manufacturers to enable informed decision-making. The feedback mechanism allows continuous monitoring of price trends and pharmacoeconomic efficiency, empowering prescribers and patients to make evidence-based choices while applying market pressure to curb manufacturer price increases.

Inventive Principle:

Principle #23Feedback

Data Source

PatentUS8560338B2Method for competitive prescription drug and/or bidding service provider selection

Publication Date: 2013.10.15 TAG LLC (US)

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.