“I used my insurance for birth control pills and my copay was $50. The same medication is available for $11.65 when paid in cash. That’s a difference of $38.3. How can the price be so different?”
Most Americans have insurance that offers coverage on prescription drugs, but not all medications are covered. When your pharmacy collects a copay with your prescription, you can actually end up paying more for the drug than you would have paid in cash.
Why Is My Prescription More Expensive With Insurance?
Depending on your health insurance plan and policy, you may pay more for your medication if your plan requires you to pay a set copayment to the pharmacy for your medication. Regardless of the cost of your medication, you would be responsible for this copayment, but sometimes your copay could be more costly than the medication itself.
Most of us believe that a copayment on prescriptions assumes that the insurer and the patients share the costs of the drug. However, when a copayment exceeds the cost of the medication itself, the prescription benefit manager (PBM) keeps the difference as a profit. A common example would be when you pick up a standard antibiotic or blood pressure medication which cost $4 and your copay is $10.
How Insurance Prescription Coverage Works?
Prescription coverage varies by insurance plan and the list of prescription drugs covered in a health insurance plan is called a formulary. If the medication you have been prescribed is not on the plan’s formulary, you may have to pay for that prescription out-of-pocket.
The cost of your prescriptions may depend on how the costs are factored into your deductible and your actual cost of medication is not known until the prescription is sent to the pharmacy.
Another little-known secret driving up the price of your prescriptions is known as a copay “clawback.” These are prescription drug overpayments that occur when your copayments exceeds the total cost of the drug. The insurance company tells the pharmacy what to charge. The insurance company can overcharge the consumer, forcing the pharmacy to collect that amount, and then takes the extra money back as profit. This practice is carried out through a middleman, known know as a pharmacy benefit manager, or PBM. PBM’s negotiate drug prices with drug companies on behalf of your insurer. Some PBM’s then charge a co-pay that exceeds the cash price.