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The Bottom Line

Americans spend about twice as much on prescription drugs as residents of comparable countries spend. Dermatologists are embracing a service aimed at reducing drug costs. Skin Medicinals reports $200 million in health care savings to patients—and the health care industry as a whole.

More than 450,000 patients have received prescriptions through the
platform, and more than 9,200 dermatology prescribers have joined to date.

Drug prices in the US are among the highest in the developed world. Americans spend about twice as much on prescription drugs as residents of comparable countries spend. Prescription drug spending (including insurance and out-of-pocket payments) in 2019 was $1,126 per capita in the US, according to Peterson-KFF Health System Tracker. Comparable countries spent $552, per capita, on average.1

The Congressional Budget Office reports that per capita spending on prescription drugs roughly doubled every 10 years since 1980 before slowing down in the mid-2000s. Their data show that, although use of lower-cost generic drugs increased over the 2009–2018 period, the average price of prescription drugs did not fall significantly. They attribute this to increases in the prices of brand-name drugs.2 Peterson-KFF Health System Tracker pegs the rate of increase in per capita drug spending in the US at 69% from 2004 to 2019. In contrast, the rate of increase was 41% in comparable countries, on average, during the same period.

Faced with the challenges of rising drug costs, one enterprising dermatologist devised a solution. Today, that solution has led to $200 million* in health care savings to patients—and the health care industry as a whole. Skin Medicinals allows doctors to prescribe their dermatology patients custom compounded medications or generic medications for less than their list price.

More than 450,000 patients have received prescriptions through Skin Medicinals ( And more than 9,200 dermatology prescribers have joined the platform to date. For founder Dhaval Bhanusali, MD, a dermatologist in practice in New York, it is the specialty’s embrace of the platform that tells the story.

“We’ve always relied on word of mouth and been incredibly humbled by the support. We’ve heard that dermatologists have recommended us on podiums at conferences, organically, via their social media, to their patients directly,” he says. “I think doctors are now understanding they’re more powerful than they ever realized.”

Eliciting Change

Dr. Bhanusali says the story of Skin Medicinals is less about finances and segment interruption and more about the power of physicians to make change.

“It’s been a very interesting and humbling journey, but I think it’s proven that sometimes you don’t need a big conglomerate to elicit change,” he says. “Within dermatology, because we’re so cohesive as a group, the ability to create change is very possible and it’s happened right now in real time. I haven’t seen any other project like this that’s really overtaken the traditional paradigms of prescribing medicine or even just practicing on a day-to-day basis.”

Dr. Bhanusali says it is not uncommon for monthly medication costs for most patients to fall between $45-75 and be as high as $200, even with insurance. “We created a platform to allow dermatologists to select ingredients, and they send it to the pharmacy based on whatever they feel appropriate for their patient,” he says. “It allows you the ability to, one, customize per patient, which is somewhat novel. And two, because we have such a large user base, we’re able to negotiate pricing at a much lower price point than you’d otherwise see, whether it’s retail generic medications or even general compounded medications.”

Once the prescriber places the order, the patient received a confirmation and the order is shipped to the patient’s house—usually within 2-3 days.

Dr. Bhanusali says his objective was to target the key drivers of treatment success: Access and adherence. “We’ve seen increased compliance rates, around 80%. We have received countless emails from patients who were unable to afford their traditional medications or they’ve been priced out of it and now they’re getting it at a fraction of the cost.

“This is a ‘dermatologists coming together’ platform. This isn’t a ‘me.’ This is definitely a ‘we.’”

“I really do believe doctors should be driving change,” Dr. Bhanusali says. To that end, Skin Medicinals has funded an innovation scholarship via the American Society for Dermatologic Surgery and is supporting innovation initiatives within the Skin of Color Society (via Hairstim Labs), among other outreach measures.

Lessons Learned

With his experience building a digital platform, Dr. Bhanusali has garnered additional insights on digital health as a whole. “I think data, if used ethically and correctly, has the potential to help us create more personalized plans for patients and really understand real world efficacy of ingredients,” Dr. Bhanusali says. “I think long term, even with clinical trials, that’s something that I’ve been very inherently interested in. When you create a better tech hub and touchpoint between not just patients, but also doctors, you can really cut down the time it takes to innovate.

“The ability for us to use blinded data as doctors to improve outcomes would be a tremendous the next step in healthcare,” he adds.

Currently, any prescriber of dermatologic drugs can use Skin Medicinals, and the platform is eyeing other markets. “We find it very prevalent in the low income populations and in areas where there’s not as much medical personnel. Sometimes it’s become beneficial for televisits. They can send the prescription to a place where it might be hard to get into a pharmacy,” Dr. Bhanusali says.

“I’ve learned how segmented medicine really is,” Dr. Bhanusali observes. “Even state by state they’re facing different challenges on a daily basis. Through SM, we have found that we have the ability to advocate on behalf of doctors. We can present a more holistic picture and advocate on behalf of our colleagues.”

*Based on the cost of commonly used primary active ingredients per average retail prices sourced from the GoodRX website.

Did You Know?

Private and public insurance programs cover a similar share of prescription medicine spending in the US compared to peer nations, on average (85% and 84%, respectively). Retail drugs account for 18% of total health spending in employer plans in the US.1

Drug prices vary by state with one analysis finding the highest prices in New York. The lowest were in Iowa.3



3. Alghanem N, Abokwidir M, Fleischer AB Jr, Feldman SR, Alghanem W. Variation in cash price of the generic medications most prescribed by dermatologists in pharmacies across the United States. J Dermatolog Treat. 2017 Mar;28(2):119-128.

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