Behavioral economic project: The Rising Cost of Prescription Medications - SMBS Consulting

Table of Contents
1.0 Table of Contents.................................................................................................................. 01
2.0 Executive Summary………………………………………………………………………...03
3.0 Introduction........................................................................................................................... 04
3.1 The Problem & Why It Needs to Be Addressed................................................................. 04
3.2 Purposes, Goals, and Scope................................................................................................ 04
3.3 What SMBS Consultinge Hopes to Accomplish................................................................ 05
4.0 Research Methodology..........................................................................................................
06
4.1 Methods Used to Conduct Research................................................................................... 06
4.2 Overview of Information and Data Collected..................................................................... 07
5.0 Key Findings.......................................................................................................................... 09
5.1 Key Insights........................................................................................................................ 09
5.2 Key Findings....................................................................................................................... 10
5.3 Root Causes........................................................................................................................ 12
5.3.1 Lack of Regulation………………………………………………………………...13
5.3.2 Lack of Knowledge……………………………………………………………..…13
5.3.3 Information Asymmetry…………………………………………………………...13
5.3.4 Public vs. Private Insurance Coverage………………………………………….....14
5.4 Critical Gaps……………………………………………………………………………....15
6.0 Potential Solutions……………………………………………………………………….17
6.1 Gamification of Application………………………………………………………...17
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6.2 Reward Program…………………………………………………………………….18
6.3 Mental Accounting and Budget Tracker…………………………………………….19
7.0 Evaluation of Potential Solutions………………………………………………………….21
7.1 Methods……………………………………………………………………………..21
7.2 Criteria……………………………………………………………………………....21
7.2.1 SWOT Analysis of Gamification of Application…………………….…...22
7.2.2 SWOT Analysis of Reward Program……………………………………..23
7.2.3 SWOT Analysis of Mental Accounting and Budget Tracker…………….24
7.2.4 Scoring System for Potential Solutions………………………………….25
7.3 Adjustments Rationale ………….………………………………………….25
8.0 Recommendation…………………………………………………………………………..26
8.1 Scoring System for Potential & Final Solution………………………...…….……..27
9.0 Implementation Plan……………………………………………………………….……...28
9.1 Timeline………………………………………………………….………………….28
9.2 Key Tasks……………………………………………………………………….…...29
9.3 Budget…………………………………………………………………………….....29
9.4 Challenges and Problems………………………………………………………...….30
9.5 Anticipated Results…………………………………………………………………..30
10.0 Conclusions………………………………………………………………………………...32
8.0 References.............................................................................................................................. 33
9.0 Appendices............................................................................................................................. 36
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Executive Summary
Purpose of this report
The high cost of prescription medications has forced many low and medium-income families
to take alternate measures that damage their physical and financial health. SMBS Consulting’s goal
is to understand the root causes of the rising price of prescription medications and correctly address
consumer needs through behavioral focused solutions. We understand the need to help the
Champaign-Urbana community and young adults before they transition into adulthood and must
navigate the insurance industry, so we limited our primary research to this demographic group. The
purpose of this report is to identify the key findings and root causes, determine and evaluate possible
solutions, and provide recommendations and an implementation plan based on our analysis of our
research.
Findings
We have found that even though the rise in prescription medication prices is a result of many
controllable and uncontrollable factors, consumer subjective behaviors also matter much. Our
primary and secondary research reaffirmed our findings that consumers are affected by economic,
political, and social factors. We discovered that our primary focus should be on improving
consumers’ access to their prescription medications, but not directly reducing the cost. We
discovered that the main root causes are a lack of regulation in free markets, lack of knowledge
surrounding the insurance market and creating monthly budgets, information asymmetry between
patients and the insurance industry leading to overprescription, and disparities between public and
private health care coverage.
Recommendations and Implementation
Based on these findings, SMBS Consulting has developed a set of behavioral solutions and
recommendations for the Kaiser Family Foundation to implement in the Champaign-Urbana area.
Our first proposed solution is the gamification of an application that addresses the knowledge gap of
consumers and prepares them to purchase insurance in the most efficient manner. Another proposed
solution is a rewards program for consumers to enroll in through their local pharmacies where they
receive points towards future purchases of generic brand medications. Our final solution proposes a
mental budget tracker that monitors spending patterns and creates manual monthly budgets for
consumers helping to allocate their fixed expenses. After making adjustments to our final solutions
based on results from the primary data, we plan to address all of our consumer needs within one
application. In evaluating our final solution, we used a SWOT Analysis to assess the strengths and
weaknesses of each method and a scoring system to help construct an ultimate comprehensive
solution. SMBS Consulting has concluded that an application that encompasses the Rewards
Program and Budget Tracker together will tackle the root causes of the rise in prices and reduced
accessibility of prescription medications. The implementation of this application is anticipated to
lead to desirable results that encourage continual usage and a change in consumer habits both in
short term and long term.
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Introduction
3.1 The Problem & Why It Needs to Be Addressed
The issue of high prescription drug prices has been discussed for years. The high cost of
prescription drugs has prevented low to medium-income families from affording and accessing
them. This issue needs to be addressed because the health and welfare of consumers are in
jeopardy when the medications that can improve their health, cause large financial burdens that
deter them - especially medium and low-income families. Further, this in return affects younger
generations as they are turned away from repurchasing their medications on a continual basis. In
this project, by analyzing the key facts, we will address the various root causes of high
prescription drug prices. Then by applying behavioral economics knowledge, we will be able to
come up with a viable solution that can educate consumers and strengthen their ability to attain
the necessary medications.
3.2 Purposes, Goals, and Scope
The purpose of this project is to help low and medium-income families improve their
financial ability to access prescription drugs with behavioral economic methods. There are some
macro factors driving the increase of prescription drug prices such as inflation and loose
governmental restriction. It is only plausible to solve the problem by coming up with a
behavioral solution to reshaping customers’ saving behavior gradually and educating them to
scientifically and rationally use prescription drugs. Our goal is to provide accessible solutions to
consumers that they will be interested in using on a continual basis. By addressing our consumer
needs, we have recognized a lack of knowledge in the insurance industry and a lack of rewards
and savings programs for low and medium-income families to enroll in. We hope to implement
the solutions we test into the greater Champaign-Urbana area and work with consumers to
inform them of ways to combat the rise in prices of prescription medications.
The scope of our demographics is limited to low and medium-income families in the
Champaign-Urbana area. We have chosen this area and income level as our target group since
they are the ones that are most affected by the root causes and symptoms we have identified. We
especially hope to target young adults, as they are most likely to suffer from a lack of knowledge
surrounding the insurance industry and efficiently accessing their medications. In addition, it is
beneficial to target this age as they are often in a transition period that forces them to take the
responsibility of their own health which may mean acquiring health insurance or purchasing a
prescription drug on a continual basis, without the help of others.
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3.3 What SMBS Consulting Hopes to Accomplish
SMBS Consulting hopes to raise awareness in the community about the rising price of
medication prices, inform consumers of ways they can get more prepared to afford prescription
medicine, and recommend a reward program to nudge consumers to take action. With our
proposed solutions, we hope to create programs that consumers can enroll in that encourage them
to practice behavioral focused methods that address the critical gaps in the rise of prescription
medication prices.
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Research Methodology
4.1 Methods Used to Conduct Research
In this project, mixed research methodologies are applied. The first method is the
secondary data analysis. We have gathered information from credible resources and argued for
our proposal based on the significant findings found in those studies. High U.S. prescription
prices are a controversial issue that has been discussed in many academic journals, governmental
statistics, and reference publications. The secondary research helped us to verify the urgency of
the prescription medicine dilemma and analyze the root causes behind the social symptoms.
SMBS Consulting references the professional journals from the EBSCO database, which is a free
academic library to UIUC students, containing reports and data from both U.S. government
departments and Kaiser Family Fund. By analyzing the symptoms of insufficient accessibility of
prescription drugs in both a macro-environment and individual level, we fully understand the
reasons why the cost of prescription drugs for middle and low-income families is high. After
reviewing the proposed solutions provided by organizations, we were able to conceive a
plausible solution to address consumer needs, based on the root causes of the increase in
prescription drug prices.
The second method designed is a survey, through the usage of primary research/data,
which will help us address our critical research gaps. Our primary data will focus on the young
generation in the Champaign-Urbana area. The primary research will take place in a University
setting at the University of Urbana-Champaign, as college students who are about to graduate are
representative of young people in the Champaign-Urbana area. It is our assumption that recent
graduates have limited salary amounts due to their lack of experience in the job market, which
translates to limited spending on insurance and prescription medications on a monthly basis.
Thus, reliable information planning on future medical budgets are essential to enhance consumer
well-being. With this in mind, we will use SurveyMonkey to ask the target population questions
that range in topics from the type of health care, monthly medical budget, and prescription type
preference. The survey design and questions are attached to the appendices as shown in Figure 6,
and the results will follow. The survey questions will ask consumer preferences on how they
should plan the potential medical budget and further ask if they experience personal difficulties
in coming up with a planned amount each month.
The survey results would then help with the future design development of the mobile
application and website stage. The analyzed results would determine which features should be
added in the solution platform, especially factors that potential users lack the most. In other
words, questions that ask the preferences on consumer willingness to change from current
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prescriptions to no-brand generics would help in the creation of a feature “no-brand generic
ingredient and price comparison.”
After voting amongst group members, eight questions in total based on the importance
and correlation to the solution testing are contained in our survey. Each question contains five
preference criteria, such as the likelihood of finding the solution useful. The online survey target
population may be selected from the ACE 476 course, as many of the classmates are about to
graduate. With approval from Prof. Lyons, we will send out an email asking for the participation
of our survey with a link attached. Thus, the total number of students surveyed would be about
fifty. After conducting the online survey, the outcomes will be analyzed to see if our behavioral
solutions are in need and make proper adjustments following the statistically significant factors.
4.2 Overview of Information and Data Collected
By conducting secondary research on professional journals from the EBSCO database,
data from the U.S. government departments, Kaiser Family Fund, and other credible
organizations, we found both qualitative and data to support us to analyze:
1. 45% of insured adults, ages 18-64, report an inability to pay for unprepared
medical costs (Lopes et al, 2020);
2. The laissez-faire system of the U.S. pharmaceutical companies allows them to
increase drug prices, without a legal price-ceiling for the amount;
3. Between 2008 and 2017, prices of brand name prescription drugs rose 9 percent,
injectable drugs increased 15 percent per year, while inflation only rose 2 percent
(Kodjak, 2019);
4. Unnecessary drug combination contributes to high prescription price;
5. Research and development is only about 17% of total spending in most large drug
companies” (Kodjak, 2019);
6. Consumers are often tricked into certain levels of coverage that they do not
understand what they will be covered by;
7. Poorer areas have fewer chain pharmacies and this fact leads to higher prices of
prescription medicine for low-income families than in other richer areas;
8. Current solution proposals:
a. Prioritizing generic drugs coming to market;
b. Allowing the negotiation with name-brand drug companies;
c. Importation of drugs from other countries.
9. More than 6 percent of U.S. citizens, who are aged 12 and older, have misused a
prescription medicine in 2016(National Institute on Drug Abuse, 2018).
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We also collected valuable primary data from our survey to help us understand our target
group consumers better and make further adjustments to improve our solution design. During the
first stage of our primary research, we collected information from 40 students among different
schools of the University of Illinois at Urbana-Champaign and have plans to expand our
population once we implement a solution to see where we need to make adjustments. The
findings we concluded from our primary data are the following:
1. All of the participants were upper class(junior-grad student standing);
2. 80% of participants heard from others but were not confident in their ability to
describe private vs public health care coverage by themselves;
3. Students did not plan a monthly medical budget, but felt that they could cover
unexpected costs, due to the amount, since most were claimed by their parents at
this time;
4. 75% of participants preferred name-brand drugs due to the validity, but would
consider replacing certain prescriptions with the generic brand;
5. No participant had not taken a course that explains the different types of insurance
coverage options but they showed interest in studying from an informative
application;
6. 90% of students don’t have a monthly medical budget but stated that they are able
to afford medical emergencies.
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Key Findings
5.1 Key Insights
First, after conducting the secondary data analysis, we discovered that our primary focus
should be on improving consumers’ ability to afford prescription medicine, not trying to decrease
prescription drug prices. Due to the possibility of overprescription and underinsured consumers,
high prescription medication prices are affecting the health of consumers. Insurance can be used
to reduce the financial burden on prescription medicine, but it is less available to low-income
families. Improved insurance for low-income families needs to be addressed since health
insurance reform is stagnant. Consumers need an alternative method to keep their medical costs
relatively low while covering all other essential expenses.
Second, we contend that the complication in U.S. medication costs can be negated by
educating consumers to obtain cheaper generic drugs, that are usually in the form of combination
drugs. We discovered that even those individuals covered by insurance do not receive their full
benefits. Shockingly, 45% of insured adults, ages 18-64, report an inability to pay for unprepared
medical costs (Lopes et al, 2020). Most prescription drug prices are rising annually without any
changes in product development, and companies are resorting to selling combination prescription
drugs. The details of those facts will be addressed later in the key findings section.
The third key insight we discovered is the inefficiency in the current Congressional
efforts through the Affordable Care Act and Medicaid/Medicare. The laissez-faire system of the
U.S. pharmaceutical companies allows them to increase drug prices, without a legal price-ceiling
for the amount. Not only does the public insurance in the U.S. fail to cover patients for their
required prescription drugs, but also the limited amount of medical budget for each household
further jeopardizes payment methods. Additionally, consumers’ financial ability to access
prescription medicine is harmed by the unethical, inefficient manner of the current healthcare,
such as discrepancies in drug prices based on location. Further facts are demonstrated in the key
findings section.
Further, we find it very important to include combination drugs as part of our desired
future action. As a team, we understand the need to eliminate these wasteful drugs. Combination
drugs are medications that combine two active elements into one pill. Combo drugs often make it
easier for consumers who are on multiple medications, as it cuts out the number of pills they take
each day. In 2016, Medicare Part D paid out $925 million more using 29 brand name
combination drugs, than if they had used generic counterparts. (Lee, 2018). As a result, the price
of combo drugs is more than the cost of individual pills. Consumers often do not think twice
about the higher prices as they consider the efficiency of combo drugs more appealing.
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With the above-mentioned insights, it is vital to recognize that the first step to solving the
problem is to increase informational awareness of both public and private insurance coverage. If
each coverage has an easily comparable format, consumers will be able to make sound decisions
based on their needs. Consumers also need a comparison between combination drugs and
separate drug purchases, which could significantly reduce current medical costs. Further, how to
help equip low-income families with prescription medicine sustainably is the most significant
issue to consider while designing our solution. More key facts and root causes we concluded
from the symptoms will be introduced in the following sections.
5.2 Key Findings
Upon completing our research, we discovered pertinent information that would help
explain the social symptoms that occur from current market inefficiencies. First, we found that
prescription drug prices have been increasing in the recent decade, but not in correlation to
technological progress. Between 2008 and 2017, prices of brand name prescription drugs rose 9
percent, injectable drugs increased 15 percent per year, while inflation only rose 2 percent
(Kodjak, 2019). Pharmaceutical companies state that the reason drugs are so expensive is that
part of the revenue made by selling these drugs is to fund research and development for future
medications and studies. However, according to the Health Policy and Management at John
Hopkins University, “Research and development is only about 17 percent of total spending in
most large drug companies” (Kodjak, 2019). So this makes consumers think that the high prices
they are being forced to pay for their prescription medications go toward a company’s profit and
making the market more monopolized. This can be further proved in a study done by the
University of Minnesota in which the AARP Public Policy Institute recorded the growth in brand
name drug prices over the years and how it grew faster than inflation (Purvis and
Schondelmeyer, 2019). The figure shown here displays how from 2006 to 2018, the price of
generic drugs continued to soar on average. Most Americans are not well prepared to incur the
massive costs that prescription drugs cause them-the average American is not financially
prepared to pay for a surprise bill that is $2,000 or more. The expectation that consumers will
pay upwards of $10,000 a month for combination prescription drugs is irrational given their
current financial standing and the competitive market.
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Second, by researching various past studies on U.S. prescription drug prices, we
discovered that prescription drug prices are much higher in the U.S. compared to other developed
countries. According to a journal of Health Care Financing Review, letting free markets
determine drug prices is one of the reasons why prescription drug prices are so high (Gross,
Ratner, Perez, & Glavin, 1994). Other developed countries are regulating these prices based on
current economic trends and consumer needs. By doing so, they can take low and
medium-income families into consideration so that those they do not resort to secondary
measures that jeopardize their families’ well-being. Other developed countries put consumers'
needs ahead of the possibility of large profits for pharmaceutical companies, ensuring the
continued health of their citizens.
Third, purchasing insurance coverage does not always mean that consumers will be
covered to the extent that ensures low costs of prescription medications. Consumers are often
tricked into certain levels of coverage that they do not understand what they will be covered by.
Out of all of the consumers who report that the prescription medications they are prescribed are
not covered by their insurance carrier, fifty percent simply do not fill the prescription
(Neighmond, 2020). The high costs that low and medium-income households allocate for their
insurance plan do not do them any benefit if they can not receive the proper medications that
they need. The lack of accessibility of prescription drugs for low and medium-income families
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has increased as commercial insurance becomes less affordable and universal coverage decreases
for them.
Another interesting fact we gathered is that prescription drug prices are negatively
correlated to poverty. In an observational study conducted by Gellad et al. (2019), researchers
found that prescription drug prices were higher in poorer zip code areas in Florida. They
concluded that the uninsured individuals, who usually have lower income and poorer health,
were under higher pressure for out-of-pocket costs(Gellad et al., 2019). Additionally, Luo,
Kulldorff, Sarpatwari, Pawar, & Kesselheim (2019) found in their observational research that
brand-name drug prices are similar among different pharmacies, while cash prices for generic
prescription medications are higher in smaller pharmacies. This latest finding explained the
discoveries in research conducted in Florida, as poorer areas have fewer chain pharmacies which
will lead to high prices of prescription medicine for low-income families.
Several proposals have involved macro policies from the government, such as prioritizing
generic drugs coming to market and allowing the negotiation with name-brand drug companies.
By increasing the awareness of rising drug prices, consumers will be able to fight for policy
reforms to help combat. A unique method that could alleviate stress for numerous consumers
could be the importation of drugs from other countries. Policies that would allow consumers to
import drugs from foreign nations at their prices could give domestic pharmacies an incentive to
lower their prices (Dolan & Tian, 2020). If consumers are given this option, the market could be
opened up to numerous other large scale companies, increasing the competitive market.
Consumers having the ability to purchase prescription medications from foreign nations will
affect insurance prices and create more discrepancy in coverage options.
Finally, another glaring issue is the abuse and misuse of prescription medicine in the U.S.
According to a research report from the National Institute on Drug Abuse (2018), more than 6
percent of U.S. citizens, who are aged 12 and older, have misused a prescription medicine in
2016. There are two main reasons: unintentionally using prescription medication and intentional
nonmedical use. Recognizing and preventing prescription drug abuse and misuse is crucial while
trying to increase the accessibility of prescription drugs among low-income families. With these
findings, SMBS Consulting understands how consumers are affected by the unjust insurance
markets and better evaluate their needs.
5.3 Root Causes
SMBS Consulting developed a list of root causes that would then lead to symptoms of why
accessing prescription medications is becoming more difficult for low to middle-income families.
The figure below depicts the factors that SMBS Consulting considers as causes for the increase
in prices and the reduced accessibility of prescription drugs. Each item will be discussed in detail
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further in the report. In the following sections, we will focus on the four most significant root
causes.
5.3.1 Lack of Regulation
The most crucial macro root cause is the lack of regulation on prescription prices. According
to a journal of Health Care Financing Review, letting free markets determine drug prices is a
significant reason why prescription drug prices are so high (Gross, Ratner, Perez, & Glavin, 1994).
This root cause has led to several symptoms: first, name-brand medications are protected by patents
so the cheaper generic medicine is hard to survive in the current market due to competitiveness; and
second, merging and acquisition in the pharmaceutical industry has enabled medicine companies to
set higher prices because they have strong bargaining power. Large brand name companies hold
power in the pharmaceutical industry and play a major role in dominating smaller generic
companies. Even though the effectiveness of generic drugs has been proven to be the same as the
name brand medications, consumers will pay high prices due to the validity they hold.
5.3.2 Lack of Knowledge
The second root cause is that consumers lack awareness of saving money for
medicine, including a monthly budget. Especially for low and medium-income families, monthly
budgets are essential to correctly allocate their income over numerous essential living needs and
can be easily thrown off due to economic events and preferences. Briesacher et al. (2009)
asserted that poor families have a very limited budget for medicine beyond basic living needs,
even when they have Medicaid coverage. However, being in the low-income class is not the only
reason why these families have insufficient budgets for prescription medicine. They often pay no
attention to saving for medicine seeing that they have no reason to - they lack a clear financial
plan and educational knowledge on the allocation of their spending. Insufficient budget for
prescription medicine has led to a vicious circle that begins with young adults. Reducing dosage
or combining medications is a coping strategy that is not conducive to their rehabilitation and
later requires more medications for prolonged illnesses(Briesacher et al., 2009). Due to
out-of-pocket costs, low-income households are forced to cut back on basic necessities in order
to cover these expenses. If households can learn how to properly budget and create a saving plan
to cover medical expenses, they will not have to take extremes that might jeopardize their health.
5.3.3 Information Asymmetry
The third root cause is information asymmetry between the patients and the insurance
industry. In some cases, patients do not fully understand what drugs really cost, how much
medicine they should take, and the type of insurance they are covered by. Kelly, Wells, Pawson,
LeClair, & Parsons (2014) concluded in an experimental study, that combinations of prescription
drugs not only increase the medicine price but also endangers young adults' health. Further,
pharmacies over-prescribed medications. Over-prescription is very common in the U.S., and
according to the Healthcare Management Degree Guide, doctors are prescribing more
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prescription drugs to consumers beginning at a young age. Most commonly, stimulants like
Ritalin are over-prescribed for children with ADHD. Over-prescription affects consumers as it
creates an imbalance in their system that can only be fixed with more medication and doctor
visits.
5.3.4 Public vs. Private Insurance Coverage
The last root cause that we identified is the huge disparity between public health insurance
and private health insurance coverage. The low coverage of prescription drugs can also cause many
issues for consumers and lead to numerous symptoms on their health. An official government
booklet from the US Department of Health & Human Services stated that there are several Medicare
plans to cover prescription costs (2019). For young adults, the daunting task of having to look
through the different insurance plans and pick one that correctly fits their needs becomes too much,
and they often go with the cheapest plan, which can result in the least coverage. However, the Kaiser
Family Foundation (2019) illustrated that in 2018, as shown in Figure 1 in the Appendices, 52% of
prescription drugs filled at pharmacies are covered by commercial insurance (More state-level data
are demonstrated in Figure 2-5). Medicare’s share is only 16% of the total prescription medications
purchased and Medicaid's share is 28%(IQVIA, 2020). One of the reasons why the rate of coverage
of Medicare and Medicaid is so low is that many prescription drugs are not meeting the necessity
criteria-33% fulfill(Goins, et. al, 2019). In most cases, private health insurance can be offered by
employers, but for low and medium-income households, this can be difficult to attain due to their job
market. Public health insurance paid for by government funds, can not cover all of the needs that
some consumers have and they face the repercussions. Strict eligibility requirements are in place for
public health insurance and this deters consumers from applying, further hindering their ability to
receive adequate coverage.
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5.4 Critical Gaps
When completing our key findings and root causes on the rising cost of prescription
medications, we came across critical gaps in our research. This became more evident when we
tried to evaluate our consumer needs and potential solutions. The first gap we identified was if
other countries were experiencing similar situations, or if the increase in prescription
medications is confined to the U.S. In order to evaluate our potential solutions, it would be
helpful to understand how other countries are handling the increase in costs, and what solutions
they have put in place to combat this. Bills have been proposed in Congress that would allow for
the legal importation of cheaper drugs from Canada so that pharmacies do not have to resort to
rising prices(Campbell, 2019). Drug companies who determine the high prices will be hurt if this
bill is passed as consumers will be able to afford and access their prescriptions more frequently.
In addition, Medicare will be able to negotiate drug prices and apply penalties to companies
whose U.S. prices far exceed the prices in other developed countries(Campbell, 2019).
Regulators have failed to emphasize cost-effectiveness due to the large competitiveness of the
U.S. drug industry. Profit-seeking pharmaceutical companies rely on the competitive industry to
drive consumers' demand to purchase these high prescription medications because they know
that they are a necessity and can not receive them elsewhere.
The Affordable Care Act was put into place in 2010 with the hopes of reducing federal
and state-level health insurance and prescription drug prices. In many ways, the Affordable Care
Act is highly misleading to consumers. Not only is Medicare, but the whole U.S. healthcare
system, a contributor to the rise in prices and utilization. With the introduction of the Affordable
Care Act, providers have been forced to think past effectiveness and consider the value and cost
of certain programs, therapies, and medications that will allow them to receive the greatest
profit(Lotvin, et. al, 2014). As a result of this, the Affordable Care Act has created an unfair
relationship between medication spending and rebates. Expected rebates have thus caused the
prescription drug prices to rise, as consumers anticipate this ‘bonus’ that they will then reallocate
to buy more overpriced medications. Although there have been numerous positive effects on the
Affordable Care Act, including more affordable and universal health care, low and
medium-income consumers face harsh side effects when they are not knowledgeable of their
insurance coverage and possible options.
SMBS Consulting also tried to research how families allocate their monthly budget, and
if there was a purpose behind the mental accounts they create. By understanding how families
budget for their medical expenses and basic needs, SMBS Consulting can better offer a solution
that effectively serves consumer needs. Low-income households allocate limited resources to the
monthly medication budgets-the majority of their spending is devoted to housing, food, and
transportation(Figure 1)(Majerol, Tolbert, & Damico, 2016). For most households, this also
means that they incur debt due to the volatility of the economy and escalated prices. As a result
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of this, households are spending even smaller amounts on medical expenses in order to fund
essential living needs. Despite having smaller monthly budgets in the first place, low-income
households covered by Medicaid spend on average 1% of their monthly budget on prescription
medications(Majerol, Tolbert, & Damico, 2016). To an extent, low and medium-income
households are not aware of how much medical expenses can be. By learning more about the
monthly budget of households, we hope to be able to devise a plan that creates awareness for the
importance of receiving proper medical treatment and how families can adjust their budgets to
cover these expenses.
In addition to learning more about the insurance industry, we also are looking to have a
general understanding of how insurance companies deny or approve certain monthly prescription
requests. This will help us better create a solution that serves consumers because we can help them
select the right plan and allocate properly. Even though consumers have health insurance, that does
not ensure that they will be able to afford the certain prescription medications that they are
prescribed. Despite wide insurance coverage, more than one-third of adults, across various income
groups, were not able to purchase a routine medication due to their insurance not covering the
costs(Neighmond, 2020). As a result of being denied coverage, consumers are forced to not fill their
prescriptions because they can not pay for them themselves. When an insurance company denies a
consumer coverage, they are limiting the resources that low and medium-income families have. It
would be helpful to understand what the main reasons consumers are denied coverage, beyond
filling out information incorrectly. Consumers try and jump back and forth between different
coverage options in order to find the right options, but this ultimately leaves them uninsured since
they can not cover the expenses. Helping consumers lookout for signs that would cause them to get
denied coverage and prescription needs would better help us serve their needs in the long run.
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Potential Solutions
After evaluating the root causes and symptoms of the rising cost and reduced
accessibility of prescription medications, we developed a list of potential solutions to implement
into the Champaign-Urbana area. The solutions we have chosen include the gamification of an
application for consumers, a rewards program tailored towards generic drugs, and the utilization
of mental accounts to help consumers with monthly budgets.
6.1 Gamification of Application
Our first potential solution involved the gamification of an application that would address
the knowledge gap of the insurance industry and purchasing prescription medications for low
and medium-income households. After conducting secondary data analysis, we discovered that
our primary focus should be on improving consumers’ understanding of what they are
purchasing and the most effective ways to. We concluded that consumers purchasing insurance
for the first time are generally overwhelmed by the options and the various terms, and have little
previous experience in the industry themselves. However, when consumers were able to take an
elective class on the material, they felt more confident in their ability to understand the various
insurance markets and navigate through the different coverage options. As a result of this, we
feel that an application that teaches consumers about their insurance coverage, how it applies to
their prescription medication, and what it does not entail/cover will better equip consumers to
successfully navigate the insurance and prescription medication industry. The gamification
process will ensure that consumers stay engaged and routinely visit the application when they
have various questions and practice their knowledge given changes in their coverage or
government policies. By making the application user friendly and with game-like features that
would allow for term practice and real-life scenarios, consumers will recognize their knowledge
gap and have a solution to help directly address it. We will also include features that resemble a
video game so that consumers have an interactive experience that takes them through multiple
steps to understanding their knowledge gap. The main problem with this solution is delivering it
to consumers in a way that entices them to continue using the application. Bringing this
application to the market could take years after numerous rounds of testing, but we feel that it
will address the knowledge gaps that we have observed within the low and medium-income
families in Champaign-Urbana and ensure that consumers understand what they are purchasing.
While this solution might be more effective in the long run, we have decided to pursue it as
knowledge of this industry can help consumers in areas other than purchasing prescription
medications.
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6.2 Reward Program
Our proposed solution is to work with pharmaceutical companies, like Walgreens and
CVS, to create a rewards program as an incentive for consumers to purchase generic drugs. We
discovered that another primary focus should be on improving consumers’ ability to afford
prescription medications. Currently, consumers favor purchasing name-brand drugs due to the
validity they hold in the market, even though generic drugs are of the same chemical makeup.
Name-brand drugs are pushed over generic drugs, even though they are much more expensive
for those on long term prescriptions. Working with pharmaceutical companies to inform
consumers of this, they will be incentivized to switch to generic drugs, helping to eliminate the
monopolies of large name-brand pharmaceutical companies. In return, the usage of generic drugs
will increase and consumers will be saving money. The reward program applies nudge to
encourage consumers to continue purchasing their medications as they can finally afford them,
and they will receive points that can be redeemed on future medications. Once enrolled,
consumers will begin receiving “points” that they accumulate when they purchase a generic drug
and can utilize them on future purchases of generic drugs to further reduce the price. The
incentive of receiving a discount on future purchases will motivate consumers to make the switch
to generic drugs. A limitation of this solution is offering a financial incentive that may not be
available in the future once the name brand and generic drugs are equally demanded. In addition,
consumers are very sensitive to financial change and this may take many years to change their
consuming habits. We feel like this solution is the most appropriate for low and medium-income
households as it encourages consumers to continue purchasing their medications and offers an
alternative method that they will turn them into smarter consumers. The final aspect needed to
consider is that some pharmacies, like Walgreens, have their own reward program. From the
perspective of drug discounts, the Walgreens’ prescription savings club seemed to be attractive,
but it requires consumers to purchase refills at a 30 or 90-day level. The reward program applies
to a group of consumers, but is not useful to those who need a variety of medicines, but not
refills. Also, the program gives points to purchase items at Walgreens. The issue is that items
other than medicine in Walgreens are more expensive than in groceries so reward points that can
only be used at Walgreens are not that attractive to low-income families. Additionally, the last
mile problem exists: independent reward programs in different pharmacies do not mean people
will take the benefits because those programs each with different rules, make it hard for
consumers to make choices. Thus, to nudge consumers to use the reward program, further
discussion will be conducted in the recommendation section.
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6.3 Mental Accounting and Budget Tracker
The final solution that SMBS Consulting is proposing a tracking application that
monitors spending patterns, and manually creates mental accounts for monthly budgets. Mental
accounts mean that people categorize their money into different mental categories. After
conducting the secondary data analysis, we discovered that the final primary focus should be on
improving consumers’ ability to allocate for their fixed expenses. The goal of the budget tracker
is to nudge consumers to put more weight on saving on medical budgets and help them save on
prescription medication purchases. Even though currently some budget APPs are popular, none
of them focus on helping consumers save money on the medical budget. Our plan is to work with
consumers and credit card companies to evaluate information on how much consumers spend in
each category of expenses and create mental accounts that they can utilize to help them stay on
track. This tool will manually distribute your monthly income into each expense category,
locking the budget each month unless notice is provided of a need for changes. The budget
tracker would take into consideration their current income and current medication price, and then
adjust the budget for each spending group they create based on past month results. Nudging
consumers to either increase or decrease the amount of money in each mental account will also
be taken into consideration, given inflation rates, government policies, and evaluation of prior
month spending. Further, a special feature of our budget tracker is that we provide combination
drug information in the budget tracker when consumers purchase a drug that has a cheaper
alternative but has the same impact on human health. And if consumers purchase a drug that is
not a combination drug, the budget tracker will also provide visualized data to tell the user how
much he or she just saved and how much cumulatively saved. This savings is beneficial in
bringing down the unknown insurance fee increases due to information asymmetrical drug
purchases. The main reason is that pharmaceutical companies that are trying to combat generic
drug brands do so by accompanying coupons at the pharmacies. These purchases, through
seemingly price beneficial coupons, actually increases individual insurance fees without much
consumer acknowledgment. Along with this underlying incentive system, emotional nudging
will also apply to send different honor badges to users who successfully saved money for
monthly medication budget, taking advice to purchase cheaper alternatives but not combination
drugs and taking badges from them if they failed to save or spend as the plan of their mental
accounts. The consumer will also have the option to alter how much money they place in each
mental account before the financial period, but the ability to change during is restricted. We are
making the assumption that all consumers have a credit/debit card and have the ability to access
their online banking account through a smartphone or computer. We understand the limitations
in accessing private credit card information, but we think that it would be very helpful in creating
a tailored monthly budget for each consumer's needs as there is clearly a need for improved
methods to saving. In addition, unknown expenses can arise and would result in changes to the
mental accounts, but consumers will be able to work with a representative to formulate a plan on
how to adjust to the scenario. While we feel that this could be a quick fix to the problem, we face
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unknown economic consequences and the possibility of malleable mental accounting. Holding
consumers to a strict budget will encourage them to increase their savings and become more
rational consumers who will better prepare themselves for additional expenses and their future
plans.
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Evaluation of Potential Solutions
7.1 Methods
To evaluate our designed survey, we need to first confirm if the target population
identified needs alternative cost-reducing behavioral changes. The opinions on the level of wants
and needs will help SMBS Consulting and the Kaiser Family Foundation identify areas we need
to improve on.
In our survey, we first tried to understand if consumers believed that they could have
enough emergency funds to cover a surprise medical expense. Once consumers realize whether
they are prepared or not for a future unexpected cost, we can determine if they would need a
device or a solution implemented to help alleviate fear. If they feel that they can easily cover a
medical expense, then we need to separate those consumers and take a different approach with
them. The survey questions would emphasize the differences between before and afterthoughts
of being exposed to this issue. For consumers who feel that they can cover a surprise medical
expense, a question asking preferences for brand-name or generic drugs would positively
reinforce the idea that purchasing generic drugs would be more cost-effective. Thus, the positive
spectrum in which consumers feel the need to reduce costs or save properly for future medical
bills would result in consumers wanting provision for their needs.
Once we evaluate our consumers' responses, we will be able to accurately assign a
solution to their current needs. Our detailed conclusion from our survey will be discussed in the
adjustment section. After figuring out our target consumers’ demand and their attitudes toward
new solutions, we will be able to assign a certain solution to them that addresses what areas they
report as troublesome. Gamification of an application program that induces consumers to address
the topics that they do not understand would allow individuals with short-attention-span to dive
into such a solution. The plausibility of its effectiveness would be tested by an inclusion of a
virtual focus group survey question that asks individual preferences of a phone application or
rewards program opportunity, once we are able to identify their immediate needs.
7.2 Criteria
Criteria we used to assess our potential solutions are based on the SWOT Analysis, a
simple but helpful strategic planning technique to assist us in comparing the strengths,
weaknesses, opportunities, and threats of potential solutions. By examining these four factors, we
can figure out which solution will yield the best results and if we combine our solutions to solve
the problem more effectively by fulfilling their strengths and making up for their weaknesses.
We look forward to finding a viable solution that is not so costly, effective in the short term and
sustainable in the long term, and helps solve the insufficient prescription medicine accessibility
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problem from the root. Finally, we used a scoring system to help illustrate the different strengths
and weaknesses of our potential solutions.
7.2.1 SWOT Analysis of Gamification of Application
By implementing this solution, we anticipate that a gamification design can attract
consumers to be willing to learn useful knowledge about insurance coverage. By doing so, we
can equip consumers to make better decisions while not making them feel as if they are forced to
learn complicated information. The weakness of this solution is that it is hard to ensure
consumers continue using the application to catch insurance policy and government changes and
make adjustments based on full knowledge. To attract consumers to continue using this
application, we need to focus our effort on the gamification design and promotion. The
opportunity of this solution is that it is the most hopeful one of our potential solutions to gain
governmental support since they also want to improve the status quo, but there is too much
resistance to price intervention and high financial burden. This solution is a viable alternative for
the government to solve the dilemma from a behavioral economic view: instead of a costly social
program to subsidize the low-income families, nudging and educating consumers to better use
their insurance resources in a more useful and economic manner. The possible threat of this
solution is that insurance companies may take action to fight against this application based on
their mechanism of making money. Upon analyzing our results from the survey, we can make
adjustments to our application based on the knowledge gaps that consumers indicate and tailor
the application around certain topics.
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7.2.2 SWOT Analysis of Reward Program
In the short term, the Reward Program is the most effective among our potential solutions
because low-income families are sensitive to financial reward. Even though we anticipate that
this solution will work quickly after implementing, it has an obvious weakness that needs to
improve on: every reward program needs funding to pay for the participants continuously using
their points, and it is more costly than the other two solutions. Even though the amount of reward
allocated to each family is not much, the accumulation of points can far outreach this. In our
primary research survey, we find that a large group of young adults do not have a monthly
medical budget, but prefer expensive brand-name medicine - due to advertisements and the belief
that the more expensive the drug is the better its effects. The opportunity of this solution is that
in the long term, after occupying a larger market share, people will get used to a generic
medicine and understand that it is unnecessary to purchase some expensive brand-name
medicine. In the future, consumers who purchase more and more generic medicine will be
unlikely to shift back to consume expensive brand-name medicine, even after reducing rewards
because they will realize generic medicine is more economical to them. The cost of this solution
can finally be paid for by the increasing profits based on the increasing purchase of generic
medicine. Pharmaceutical companies will also benefit from this program as they will be able to
compete with the monopolies. The threat of this solution is that other brand medicine
pharmaceutical companies may strengthen their advertisement to attract consumers and reduce
their price temporarily to initiate a price war. In the short term, consumers will benefit from the
reduction in prices, but in the long run, they will finally raise the price to catch up with their cost
used to stop generic medicine promotion. In order to move forward, the information we have
collected on consumers’ preferences of name brand vs generic drugs will allow us to separate the
two groups and work with them individually to identify their needs.
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7.2.3 SWOT Analysis of Mental Accounting and Budget Tracker
Creating a mental accounting system and budget tracker is the most sustainable solution,
but we find it difficult to manage and ensure the quality of. The strength of this solution is that a
manual Budget Tracker will offer consumers a “precommitment” tool to help them achieve their
goal of saving and nudge them to solve the problem of procrastination and indiscipline. The
weakness of this solution is that it is hard to make sure consumers don’t add bias to their
financial system and they follow professional advice. In other words, we cannot promise this
solution is workable to everyone because of different personal execution ability and self-control,
but at least using Budget Tracker will prime them to think about their budget issues. The
opportunity of this solution is that computer technology is getting more advanced. By applying
more intelligent algorithms, Budget Tracker can provide personalized tracking and adjustment
suggestions to consumers. Additionally, applying artificial intelligence can also make Budget
Tracker more user-friendly to clients of all age spectrums. The threat of this solution is that
tracking private budgets may lead to a prosecution from some customers and if the regulation of
Budget Tracker is not strict enough, consumers’ information may be used in illegal activities.
Upon evaluation of our solution and survey, we have realized a need to inform consumers of
how often surprise medical expenses can occur and the need to create a savings account that
would allow them to cover these expenses. An adjustment we need to make is to set up standard
mental accounts that all consumers use so that they do not become overwhelmed with too much
information and budgeting choices.
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7.2.4 Scoring System for Potential Solutions
Solutions Low
Cost
Customer
acceptance
Fundamentally
solve the
problem
Effective in
the short
term
Sustainable
in the long
term
Avoidance of
external
resistance
Gamification
of Application
A A A A B A
Reward
Program
B A+ B+ A+ A- B
Mental
Accounting
and Budget
Tracker
A+ B A B+ A+ A-
7.3 Adjustments Rationale
The first step in adjusting our solution is analyzing our survey which is used to assist us
in understanding our specifically targeted consumers: young college students who are about to
graduate with little savings. We surveyed 40 undergraduates and graduate students of UIUC
from Gies Business School, Grainger Engineering School, Agricultural and Consumer
Environmental Sciences School, Liberal Arts School, and School of Labor and Employment
Relations. Overall, students show positive attitudes towards cost-reducing alternatives to current
prescription drugs. By analyzing their responses, we found it interesting that 90% of students
don’t have a monthly medical budget but stated that they are able to afford medical emergencies.
This contradictory statement can be explained by the fact that many college students are still
receiving financial aid from their families so that they do not pay much attention to emergency
budgets, and they do not know the extent of a medical expense. However, they need to
understand the significance of preparing ahead for medical emergencies. Then, we figured out
from our survey results that most students are only somewhat familiar, or even not familiar, with
the difference between private and public healthcare coverage. This finding validates our view
that the knowledge gap exists and further education is needed. The third finding from our survey
we found is that none of them have learned from online class or research before choosing
insurance, but they are willing to study from an informative application. This discovery makes us
more confident in our first solution. The last conclusion we draw from our primary research is
that students highly prefer brand-named prescription medicine because of the preconceived
notion that prescription drugs must be much better. This fact also reminds us that the Reward
Program may not be as effective as we anticipated. But since young people are willing to receive
new information to make efforts to reduce their cost of medicine, we still have strong faith in our
solutions but with some necessary adjustment.
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Recommendation
After learning more about the consumers, we came up with a final recommended solution
to propose to the Kaiser Family Foundation. The recommended solution focuses on resolving the
parts that are graded as a level “B” in our SWOT Analysis scoring system. First, to encourage
continued usage of the gamification application, we need to add the publicity of the application
into the Budget Tracker: using attractive short words and pictures in the loading page to catch
consumers’ attention and make them interested in digging into the application to know more,
especially when there is a huge change in policies. We also plan to design a community forum
for consumers to communicate with others in similar situations or simply share their thoughts to
feel more emotionally connected in this user-friendly gamification application.
Second, the Reward Program and Budget Tracker program can combine by convincing
local banks to cooperate with pharmaceutical companies. By allowing banks access to their
account to track their spending patterns with Budget Tracker, consumers are able to earn reward
points when shopping on generic medicine with a cooperative bank’s card. Reward points can
later be used for discounts in future generic medicine shopping. If some pharmacies like
Walgreens have its reward program already, their programs do not conflict with ours because our
program is aimed at not only reducing the prescription costs for low-income families but also
nudging users to pay more attention to their bank and their spending behaviors. Our reward
program will guide their customers to better engage in the existing reward program. A reward
program of a specific pharmacy cannot reflect the cost difference effectively to consumers by
concluding the data in a budget tracker associated with their bank APP. Even though some
consumers may not care about the rewards and deny to use Budget Tracker, we will still prime
them by having bank clerks inform consumers of the program and the large savings that they can
achieve. Further, after equipping consumers with a gamification application, we can address the
importance of personal financial wellness, after solving the problem of the knowledge gap. By
showing individual reward points in Budget Tracker, we can nudge consumers to check the
Tracker more often and receive frequent notifications about updates.
When these three solutions come together, the effectiveness in the short term will
improve. A desirable result is that consumers will begin to purchase more generic medicine and
the cost of the Reward Program will get paid for by increasing the volume of sold generic
medicine. Also, by cooperating with banks, pharmaceutical companies will increase their
chances of receiving low-interest loans to release their cash flow burden and risk. The final
implicit benefit is that it will be harder for brand-name medicine producers to hinder generic
medicine promotion since if they do so, banks will also fight back to protect their benefits from
the program. The only thing brand-name companies can do is reduce their prices to a more
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reasonable level to compete or show better efficacy to explain its high price. To ensure the
recommended solution is feasible, we need to make sure banks will be willing to cooperate.
Since consumers will gain reward points for purchasing generic medicine with certain banks’
cards, the business of those banks will grow and improve their customer service by offering their
clients a free opportunity to learn to manage their own financial wellness. After pleasant
cooperation, pharmaceutical companies may also become high-quality clients of those banks.
After evaluating the benefits of the Reward Program and the Gamification Application that we
will bring to banks and the Kaiser Family Foundation, we conclude that it is highly possible to
persuade local banks and consumers to try the new solution to help reduce the high prescription
prices and low accessibility. The following scoring system is used to evaluate the recommended
final solution and compare it with the original solution.
8.1 Scoring System for Potential & Final Solution
Solutions Low
Cost
Customer
acceptance
Fundamentally
solve the
problem
Effective in
the short
term
Sustainable
in the long
term
Avoidance of
external
resistance
Gamification
of Application
A A A B+ B A
Reward
Program
B A B+ A+ A- B
Mental
Accounting
and Budget
Tracker
A+ B A B+ A+ A-
Recommended
Final Solution
A A A A+ A A
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Implementation Plan
9.1 Timeline
To implement a mobile application as a solution, the team anticipates a timeline of a total
of one year. The initial six months includes design and development time for an application.
First, we will discuss with a professional app developer team about the potential added features,
the story we are attempting to illustrate through this application, and the overall design of the
mobile application. The team allotted six months towards app development as the budget tracker
provides various information on prescription and combination drugs and provides visualized data
to the user. The application will need to be thoroughly tested and revised to make sure all drug
information and prices are accurate. We will utilize a workflow diagram to see who is
responsible for what as well as to set boundaries on development. This will allow us to save time
in the future as development continues. Once the application has been tested and finalized we
will begin marketing and advertising. We will conduct a marketing team to craft buzz around the
application by writing articles and blog posts as well as promoting it on different social media
mediums. The initial platform development will be done for IOS, as the Apple iPhone devices
are the most popular amongst the target age group (O’Dea, 2020). If the budget and time allow
for additional platforms in the future, we will add the application on Android devices as well.
However, the most basic application feature that works under the minimum cost range allows for
only one platform creation (Lastovetska, 2019). Since our initial development should utilize the
least amount of budget as the amount is constrained, the number of platforms cannot be as
comprehensive during the development stage and plan.
The potential functions in the application are majorly the three parts: generic drug
information comparison, budget tracker, and community forum features. To represent these three
main components in a consistent and comprehensive format, we will discuss with the app
developers the main story to be addressed and the problem we are striving to solve through this
mobile forum. First, it is essential to mention that the problem we are trying to solve is the
information asymmetry between pharmaceutical products and low to middle-income families.
For our target population to realize the problem and work towards a change, we need the three
components to transition from one information to another smoothly, encouraging consumers to
continue using the application.
Once the design and development are complete within six months, six additional months
will be spent on testing and maintenance. Such time allotment predicts total cost to be
approximate “Budget Equation: Hours * $150 * number of months = total cost (Lastovetska,
2019).”
As for the reward program combined with the budget tracker, the estimated web page
development time is approximately 6 months. We will break this down by spending six weeks on
29

a discovery phase and then six weeks towards design when beginning development. The
development itself will take four weeks, which will leave our team with six weeks to make
modifications as we roll out the application to consumers. The local bank partnership, such as
PNC or Chase Bank, would take an additional 2 months to discuss how to incorporate our ideas
into an online platform. The estimated final cost is also based on the developer hourly fee and the
final completion time numbers. Recurring costs besides the initial start-up costs can be supported
by future funding from possibly Kickstart project platforms online and additional funding from
the local bank.
9.2 Key Tasks
The main tasks to be completed are finalizing partnerships, funding, mobile application
or web development, and advertising ideas for the target customer base. Finalizing partnerships
would enable a smooth transition from solution creation to implementation. It would also
decrease the initial start-up costs of advertising expenses to an extent as partnerships would
provide a solid customer base. Funding sources need to be determined in order to reduce the
initial start-up costs of the costly mobile application and web development fees. Lastly,
advertising ideas are essential to keep the target customer base from using our solution products
in a constant manner, without significant decreases in the usage after the initial launch. We
acknowledge that other pharmacies have reward programs already and to compete with that we
will center advertising around our reward program helping customers to save more and pay
attention to their bank. This focus on reducing drug expenses by informing consumers of the
actual cost that also links to insurance fees differentiates our APP from competitors in an
existing market.
9.3 Budget
The main components of the budget are the mobile application price, web development
price, and the overall recurring and non-recurring costs of the solutions. Both the mobile
application and web development prices are determined based on the hourly pay for each
developer’s contribution.
Recurring Costs Non-recurring costs
● Promotion (Advertising Expense)
● Routine maintenance
● Information update (research and
development fee)
● Data Storage
● Vendor’s (iOS) rate
● Initial application development cost
● Initial web development cost
● Initial team management
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The non-recurring costs are part of the initial start-up cost, as application and web
development prices are the most basic parts of the creation in solution design. We also take the
costs of paying our initial team into account when these are both in their beginning stages. These
costs would not be repeated and charged in the future, as they only occur only once in the
product development stage. On the other hand, recurring costs are costs that repeatedly occur to
maintain the solutions in place. Such costs include routine maintenance, information update, data
storage, vendor’s rate, and advertising related expenses as they are costs necessary to attract
ongoing usage. We believe adhering to this budget sets us on the right track to completing
development for both programs but acknowledges that complexity can vary causing our budget
to become flexible.
9.4 Challenges and Problems
Some challenges that may arise from the mobile application and web development
solutions are how to attract an initial customer base and how to compensate for the total costs in
the development. Maintaining a solid customer base for ongoing usage of the application and
web page after a testing period also needs to be considered. Also, the essential part of the
solution- which is information such as the individual information on pharmaceutical products for
generic and brand-name drug differentiation-may need expert data from a pharmacist, and
obtaining such data can be costly and time-consuming. Thus, we need to decide whether to
incorporate pharmaceutical details from an existing application in the market or create new
content from scratch based on researched drug data. Other minor challenges may be figuring out
how to resolve maintenance issues, such as bug issues, and how to cover the ongoing costs.
Lastly, with the budget tracker solution, it is important to build credibility amongst the potential
users due to privacy concerns stemming from handling private banking information such as
through credit and debit card usage.
Opportunities from such challenges will be incorporating Kickstarter budget funding and
KKF funding to mitigate the cost issues. Also, partnerships with existing applications or online
platforms of the local banks would reduce initial startup costs and help inform consumers of our
application. Through partnerships of existing markets, product revision or development is
possible which would reduce the time spent on the overall mobile application and web
development. Lastly, as for the privacy concerns, bank partnerships would help build the
credibility of our product amongst the potential users market.
9.5 Anticipated Results
Based on previous research, our behavioral solutions meet the current consumer needs of
solving for the lack of information and a planning guidance medium. With this in mind, future
partnerships would allow our target customer base to transition from unpersonalized online
31

information and the local bank’s online banking system to a more personalized platform that
takes into consideration consumer-specific spending and consumption. Due to this reason,
challenges that arise from possible cost issues may be compensated by the funding from the KKF
organization and the local banks. Additional funding or partnerships may include local pharmacy
participation in adding drug price information based on locations. After trial runs in the market,
if the solutions meet a constant user number of 1,000 or more, subscription prices may be
implemented to help cover other recurring costs for mobile and web application maintenance.
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Conclusions
Throughout the semester, SMBS Consulting was able to properly define the ongoing
problem of rising prescription drug prices prevalent in the US. The root causes, symptoms, and
critical gaps research also aided in the discovery of current consumer needs in solving for this
socioeconomic problem. The research provided additional insight into how consumers are
affected by this socioeconomic problem.
We have been able to establish that the rising price of prescription drugs is troublesome
for the Champaign-Urbana community and we infer that they are not the only ones struggling.
Key findings and our primary research have confirmed this along with providing us information
that helps us through the design thinking process. Correctly identifying our consumer needs
through an empathetic approach has given SMBS Consulting the direction to address this issue at
its root. In addition to collecting information from our survey participation, we relied heavily on
secondary research and current methods in place that aims to solve the rising cost of prescription
medications dilemma.
To review, we have labeled the rising cost of prescription medications and the reduced
accessibility as an urgent issue that is affecting the students at UIUC and surrounding
communities. The physical and financial effects of this issue can only lead to greater burdens.
The root causes of this problem are as follows:
1. Lack of regulation due to free markets
2. Lack of knowledge of the insurance industry and budgeting expenses
3. Information asymmetry between patients and insurance industry
4. Public vs private health care coverage discrepancies
Given the large spectrum of the prescription medication industry, we have developed
potential solutions that have the potential of addressing all these root causes. We are confident
that a solution that addresses all the root causes will be most beneficial for the community,
granted it scores well on our SWOT analysis. Based on its effectiveness and feasibility, we feel
that the gamification of an application that allows consumers to collect reward points while also
staying up to date on insurance industry terms and new policies, will transform consumers and
give them the confidence to work through the high prices. We are looking forward to the
implementation of this plan, along with working with the Kaiser Family Foundation to collect
data on its success. We are eager to continue our work in the Champaign-Urbana area and look
forward to taking on new socio-economic topics that expand our knowledge.
33

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36

Appendices
Figure 2. Prescription Drugs at Pharmacies Covered Only by Cash in Different States, 2019
Resource: IQVIA National Prescription Audit (NPA™) database. 2020.
Figure 3. Prescription Drugs at Pharmacies Covered by Commercial Insurance in Different
States, 2019
37

Figure 4. Prescription Drugs at Pharmacies Covered by Medicare in Different States, 2019
Figure 5. Prescription Drugs at Pharmacies Covered by Medicaid in Different States, 2019
38

Figure 6. Online SurveyMonkey Questions
39

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