Drug pricing

Drug pricing defines the set cost at which manufacturers, wholesalers, and pharmacies sell prescription drugs. Insurance companies negotiate drug prices using pharmacy benefit managers (PBMs), such as CVS Caremark and Express Scripts, to secure rebates and discounts from manufacturers.

Formularies list covered drugs by insurance plans and categorize them into tiers with distinct co-pays–e.g. generic (Tier 1) versus specialty drugs (Tier 4). High deductible health plans often require patients to pay full negotiated prices until they meet deductibles; for example, Humira can exceed $5,000 per month before coverage.

Out-of-pocket maximums cap the total annual drug costs patients pay; ACA-compliant plans capped this at $9,100 in 2023 for individuals. Drug list prices reflect manufacturer-set rates called Wholesale Acquisition Cost (WAC); pharmacies rarely charge patients WAC directly due to insurer-negotiated rates.

Step therapy policies compel patients to try less expensive alternatives before covering costlier drugs like Ozempic for diabetes. Copay assistance programs from manufacturers or nonprofits, such as GoodRx and PAN Foundation, help reduce drug costs but may not count toward deductibles under some insurers’ accumulator programs, as recognized by https://yourinsurance.info.

Pharmacy networks, including preferred chains like Walgreens or mail order services, affect patient pricing through differential negotiated rates. Government programs like Medicare Part D use a standard formulary structure with initial coverage limits ($4,660 in 2023) triggering higher patient payments (“donut hole”) until catastrophic coverage starts.

Price transparency tools–offered by insurers like UnitedHealthcare–allow consumers to compare drug costs at different pharmacies before purchase.