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How White Bagging Can Help Avoid Big Pharmaceutical Markups


White bagging is a cost-effective practice that can help payers save money and avoid markups from big pharmaceutical companies. It gives patients the freedom to order drugs directly from specialty pharmacies, eliminating the middleman and reducing overall costs for payers. 

Retail prices for some of the most common brand name prescription drugs, used to treat all kinds of illnesses, continue to skyrocket. AARP’s Public Policy Institute reported that drug prices are rising at rates almost twice as high as inflation. The price hikes increase the cost for payers and patients, often making life-saving treatments hard for folks to afford. 

GoodRx, which aims to help people get the healthcare they need at affordable prices, has been monitoring the rise of prescription medications for years. And they’ve already seen price hikes in 2022. 

According to a report they published in January, 784 different drugs have already upped their prices by an average of 5 percent this year, including 19 generic drugs that increased in price by an average of 12.6 percent, and 765 brand name drugs that have gone up an average of 4.8 percent.

Sulfasalazine, a drug commonly used to treat ulcerative colitis and rheumatoid arthritis, is 73.4 percent more expensive in 2022, GoodRx reported. Calcium acetate, used to treat people with kidney disease, has been hiked up more than 50 percent. 

How is White Bagging Different? 

What makes white bagging different from other methods, like traditional buy-and-bill practices or brown bagging, is that medications are delivered directly to a providers’ office by a third-party specialty pharmacy. A patient buys the drug from the specialty pharmacy and has it delivered directly to their provider, who administers the treatment, rather than being ordered to a pharmacy by the provider. 

The white bagging model is a change from traditional buy-and-bill practices in the way the prescription is filled and in the way the payment is processed. This, too, allows opportunity for cost saving. 

In a traditional buy and bill practice, a provider’s in-house pharmacy will likely fill a prescription by ordering it from a pharmacy or through their own in-house pharmacy, but with white bagging, the patient orders the prescription directly.

Through buy and bill, a patient’s treatment is usually billed under their insurance medical benefit. But when white bagging, a specialty pharmacy filling the medication collects all necessary copayments and coinsurance with the payer directly, usually billing as a pharmacy benefit. 

The medication is sent directly to the provider to prepare and dispense without the added step of a traditional pharmacy dispensing to a patient. 

How Can Payers and Patients Reduce Costs with White Bagging?

This method gives payers the opportunity to negotiate better dispensing rates with specialty pharmacies, instead of being locked in to the prices they might see through traditional buy and bill practices. White bagging allows insurers to determine when, where and how drugs are purchased, prepared and given to patients, instead of leaving those decisions up to a pharmacist or healthcare provider and leaving room for mark-ups, unnecessary administrative billing and stocking and storage costs. 

White bagging also cuts down on costs that are piled up by physicians, raising a patient’s overall bill, by reducing providers’ need to buy and stop expensive medications and cutting down on the billable workload for physicians, healthcare providers and administrators. 

Many medications that are typically bought in a buy and bill system require administration by a healthcare professional and carry an extra administrative fee, raising the price even further. This is especially common for already expensive treatments like infusions and common cancer treatments. Extra administrative fees raise the price for the patient and payer, but can be avoided by adopting a white bagging method. 

Overall, white bagging streamlines the prescription ordering and filling process, cutting down on the price tag associated with administrative services. Since the provider is not buying the drugs or seeking reimbursement from a third party payer when using the white bagging practices, less billable time is spent billing payers for reimbursements. 

This process, again, eliminates the middleman and gives the insurer more control over the entire process. It creates more room for the insurer to make the most cost effective choices every step of the way and limits the likelihood of incurring expensive big pharmacy mark ups.