What Will My Drug Prescription Cost?


Such an apparently simple question does not have a simple answer. Let’s start with “whose cost.” The drug manufacturer’s? The pharmacy benefit manager’s (PBM, a “middleman”)? Your health insurance carrier’s? Your dispensing pharmacy’s? Your out-of-pocket cost? American society’s in general?

Consider Marcia who takes atorvastatin (generic form of Lipitor™) to manage her high cholesterol. A 30-day supply purchased through her Aetna health insurance plan at CVS recently cost $46. When she checked with GoodRx, however, she learned that a 90-day supply purchased for cash without insurance at a different pharmacy would cost only $18. More astonishing, the estimated full cash price with no discount coupon ranged from $29 at Costco to $392 at CVS and $439 at Walgreens. What’s going on here?

Prescription drug pricing is so complicated and so shrouded in mystery that it is difficult to tell why the price of a single drug varies so widely. Worse, if you have health insurance (and depending on other factors), you might actually pay more for a specific drug, like Marcia did, than if you had no insurance. And as more of the cost shifts to individuals (because of high deductible insurance plans, drug pricing practices, prescriptions for non-generic or more expensive drugs, etc.), your out-of-pocket costs can soar.

Are Drug Companies to Blame?

Nearly everyone has heard of the EpiPen price increase in 2016. EpiPen is an epinephrine auto-injector that delivers a precise dose to combat allergic reactions (such as to bee stings or certain foods). It is usually sold in packs of two (the second dose should be administered after 15 minutes if the first does not reduce anaphylactic shock) and is considered lifesaving for those who are susceptible to severe allergic reactions. The price of a two-pack in 2007 was around $100. After acquiring ownership of the drug, Mylan raised the price in 2016 to $609. Mylan has since made a generic version available at roughly half the cost of EpiPen. In either case, the medication expires after one year, making annual repurchase necessary. With high deductible insurance plans on the rise, out-of-pocket costs continue to be out of reach for many. Despite heavy criticism from members of Congress, former Mylan executives and employees, and consumers, Mylan has not lowered its price for the original EpiPen (see Outcry Over EpiPen Prices Hasn’t Made Them Lower).

Other alternatives, such as Adrenaclick™ (about $200) which also employs an auto-injector, are available. CVS has teamed up with Impax to sell a generic epinephrine auto-injector for about $109 for a two-pack.

Yet another alternative, Auvi-Q™, a redesigned auto-injector, is packaged with an audio recording to provide instructions about its use. Auvi-Q provides a link on its website for customers to download a form to be signed by their physician that will allow them to obtain the product through the company’s direct mail program for $0 out-of-pocket expense (to qualify, you must be insured and have a family income of less than $100,000). The list price, however, tops $4,777—an amount that will be charged to an insurance company and much more than EpiPen.

This rather extreme example shows that there is little control over what pharmaceutical companies can charge for their products. Most charge what they do simply because they can.

What About Pharmacy Benefit Managers (PBMs)?

Most people (like me until recently) have never heard of pharmacy benefit managers (PBMs). Such a name might lead you to think that they benefit all of us who purchase prescription drugs by negotiating lower prices. But that’s not what actually happens in many cases. PBMs (individuals or companies) are hired by insurance companies, large employee unions, and other institutions that offer prescription drug benefits to their members or clients. The PBMs negotiate pricing contracts with drug manufacturers. The process, however, often results in an increase in manufacturers’ list prices and includes a series of transactions that allows some PBMs to skim profits.

Here’s an oversimplified example of how the cycle typically works. Imagine that APEX is a drug manufacturer that makes NonAnx to control anxiety. RxBroker is a PBM company that has been hired by HealthIns, a major health insurance company. DrugSave is a large pharmacy chain.

  • APEX sets a list price for NonAnx at $3,000 per dose.
  • RxBroker proposes that HealthIns will approve NonAnx for coverage, but only if APEX pays a rebate of $1,500 off the list price.
  • APEX agrees to pay the rebate of $1,500 to RxBroker, and HealthIns lists the drug as approved.
  • RxBroker then tells DrugSave that HealthIns will cover the drug at $500 per dose.
  • (Patients covered by HealthIns would pay only $30 co-pay for a 30-day supply. DrugSave sets whatever cash price it wishes for non-insured customers.)
  • RxBroker (and maybe HealthIns) keeps the $1,000 difference between APEX’s $1,500 rebate and the $500 reimbursement due to DrugSave. (This is the skim.)
  • APEX raises its list price of NonAnx to $4,000 per dose to try to recover lost revenue from other institutional customers.
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For most PBMs, no one else knows how much the manufacturers’ rebates exceed what pharmacies charge customers for their prescriptions. This means that insurers and PBMs can quietly pocket the difference. That is why most of us find out what a prescription drug costs only when we go to the pharmacy counter to pay. That is also why some states are seeking ways to increase transparency in drug pricing.

What Can You Do?

If you are covered by a high deductible health insurance plan or if you lack insurance, consider taking the following steps.

  • Demand that your federal and state legislative representatives pass legislation that requires greater transparency in drug pricing. Rising prescription drug prices are generally not a partisan issue, and many states are beginning to address the matter.
  • If your insurance plan covers the cost of prescription drugs at least to some extent, contact your carrier to learn what your in-network or out-of-network cost will be. Ask if they have any discount plans.
  • Check with drug manufacturers to see if you qualify for discounts or other assistance.
  • Check with prescription drug discount services such as GoodRx or BlinkHealth for access to lower out-of-pocket prices. Contrary to what you might think, you might pay much less if you don’t use your insurance and take advantage of these programs.
  • Discuss the cost of your medications with your physician or other health care provider. Ask them to prescribe the lowest cost, effective medication possible (usually a generic drug). Surprisingly, many providers lack sufficient information to answer your question.

Individual responsibility for prescription drug costs is rising faster than any other area of health care. We all need to become more assertive in demanding information and transparency about drug pricing and the cost of health care generally.

At Kathy’s Urgent Care, we will be happy to discuss the cost of your prescription medications with you, and we pledge to prescribe or administer the lowest cost-effective medications possible.