Why are drugs in the US priced differently based on which pharmacy you go too?

Cognizant y7U0FQ
Nov 18 42 Comments

How are drugs even priced in the US? Is there some sort of standard?

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TOP 42 Comments
  • Microsoft Dzxz35
    They’re priced for maximum possible profit.
    Nov 18 0
  • Zocdoc PBMsSuck
    Look up Pharmacy Benefit Managers. They are middlemen who control which drugs insurers cover and which ones end up in pharmacies. Pharma companies are incentivized to jack up the price of drugs so that they can offer a bigger rebate to the PBMs (which they pocket) so that the PBM will put their drug on the formulary (list of drugs insurance companies will cover).
    Nov 20 7
    • CVS Pharmacy TYvD37
      PBMs are not the profit reapers you think they are. We operate on slim margins and increasing pressure leads us down a path to zero margins. The PBM industry is not what it used to be. Everything is in the hands of the pharma co’s these days.
      Nov 20
    • Zocdoc PBMsSuck
      Really? Then how can companies like Blink Health, who doesn’t work with PBMs, afford to sell the same drugs for much less than CVS?
      Nov 20
    • Kite Pharma QIJQ84
      Come in CVS. Express Scripts makes over 100 billion a year.... Just because the margins are lower that their previously high margin, doesn't mean that pbms don't drive up drug costs. They absolutely do. That's why transparency in pbm pricing had even gone to Congress.
      Nov 21
    • EnvisionRxOptions fCNy78
      Yeah well some PBMs are transparent like Envision with the passthrough model.
      Nov 22
    • GoodRx xRDooGXr
      @ZocDoc- BlinkHealth is it’s own PBM. Google it.
      Dec 3
  • Facebook qOIs50
    I think pharmacies negotiate pricing with pharma companies on their own, which leads to pricing fluctuation. Add in the insurances that negociate pricing with pharmacies and you have one more level of fluctuation.
    Nov 18 2
    • GoodRx KrisHanson
      This is incorrect.
      Nov 20
    • New noFAANG
      KrisHanson thanks for providing 0 insight with that answer 🙄
      Dec 1
  • New Puqb60
    The manufacturers bid out products to the pharmacies and if the price is agreeable it goes on contract. The patient though may not get the contract price though. Like other medical services medicines are billed to the insurance at a rate agreeed by both parties( not the manufacturer) and its this cost you see. So a pharmacy may buy an bottle for med for a $1 but then bill your insurance company 100 of which you pay 30 (copay) and the insurance will pay 70.

    We all know saline is cheap. But if you look at the billing for how much it is when you need an IV in the hospital it’s way more expensive. This is for the same reason.
    Nov 20 5
    • EnvisionRxOptions fCNy78
      Insurance has more control than you think
      Nov 20
    • Mylan Xdgd70
      Making saline sterile is not cheap.
      Nov 20
    • New Puqb60
      I never said insurance didn’t play a big part. And sterile manufacturing is complicated and costly but the the per unit cost for a bag of saline compared to what the hospital bills the insurance/patient for is indefensible.
      Nov 20
    • CVS Pharmacy TYvD37
      As someone who has worked for both Aetna and CVS, you are overestimating the impact both the insurer and the PBM can have on consumer pricing.
      Nov 20
    • Kite Pharma QIJQ84
      Dude, CVS - you are off. Insurance and PBMs absolutely drive pricing (in addition to the pharma company) - As someone who has worked in healthcare at a provider working w patients in access and coverage, as a pharmacy consultant which included pricing and access strategy, and at a pharma company.
      Nov 21
  • CVS Pharmacy TYvD37
    We negotiate prices with a wholesaler and set prices based on contracts. The spread between these negotiations leads to our small margins. Ultimately drug prices are set by the manufacturer based on the US consumer’s willingness to pay.
    Nov 20 2
    • EnvisionRxOptions fCNy78
      You forgot to mention PBMs
      Nov 20
    • CVS Pharmacy TYvD37
      I am speaking from the perspective of a PBM
      Nov 20
  • AbbVie xtkb06
    The pharmaceutical distribution system is complicated and is subject to many of the same market forces that impact other industries. The industry is moving towards more vertical alignment where based on your coverage, the pharmacy, pbm and wholesaler have contracts in place to incentivize utilization at entities owned in part or whole.

    From a manufacturer perspective, it’s incredibly expensive to develop drugs and includes substantial inherent risk. Lots of hands also touch a drug between the time it leaves the production line and gets dispensed, everyone takes a cut.
    Nov 18 1
    • Kite Pharma QIJQ84
      This is all correct, but leaves out price inflation sure to PBMs and all the different drug prices and discounts
      Nov 21
  • How do monopolies price their product?

    Whatever price they can such that people will still buy it rather than die.
    Nov 20 4
    • New Puqb60
      Does any business operate that way? It’s a commodity. Unless it’s being subsidized the price will be high as the market will tolerate
      Nov 20
    • No, by definition it is not a commodity.
      Nov 20
    • CVS Pharmacy TYvD37
      The real ‘monopoly’ here is big pharma. No one else has as GRE war of pricing power as the patent holder. Some patents are even held by the government, but contracted out to private pharma companies. Even the scripts that go generic can be controlled by the same manufacturer, effectively rendering the generic pointless.
      Nov 20
    • That's... What I'm saying.
      Nov 20
  • GoodRx 0xDEADBEEP
    Check GoodRx.
    Nov 20 1
    • GoodRx 784
      We’ve been trying to answer this question for years
      Nov 20
  • EnvisionRxOptions fCNy78
    Look up AWP. Also, your employer has a big say in how much you pay.
    Nov 20 2
    • CVS Pharmacy TYvD37
      AWP = MSRP, almost no one pays for it, but it’s a common starting point in negotiations.
      Nov 20
    • New Puqb60
      Awp is what the insurance companies base their pricing though no one else uses it. Compare WAC and AWP for the same product. If you want to reign in consumer prices without reinventing the wheel regulate the wac and awp differential
      Nov 22
  • CVS Pharmacy walgreen
    Greediness across the board. Manufacturer(big pharma), pbm, retail pharmacy, mail order pharmacy, specialty pharmacy, insurance company and employer... everyone passes the blame on one another. It’s gonna be the case forever too. Let’s move on.
    Nov 21 0
  • Optum djt1658
    Check out Elizabeth Rosenthal's book "An American Sickness", all about economics of US health care. She has a chapter on Rx that's very eye-opening. Very knowledgeable, both a doc & a journalist.
    Nov 20 0
  • Kaiser Permanente Tztp15
    As someone who has worked in pharmacy for 15 years, the aggregate of the above responses is correct and there are multiple factors that contribute to the cost of medicine in this economy. In the end, we have a system that encourages massive RD investment due to potential profit and patent protection in a market where maximum pricing is possible compared to other world markets as they have different laws, different health care systems and how those health care systems are paid for. The question of health care is a right or priviledge still needs to be decided and in our capitalism market, what you see are numerous pharmacy field players arranging in a market dynamic intended for maximum profit distributed (unevenly) among the players who have built near permanent positions through market share and lobbying (various government rules regulating our workflow are illogical and favor certain dynamic favorable to those paying for the rule setup). Althought true that developing better drugs that further progression free survival or offer near curative therapies or simpler administrative regimens are an effective way to improve quality of life for Americans, the associated increase in cost of medicine is debatable pending your point of view. One thing is certain: our rate of drug increases is not sustainable if we want to control costs with current budgets and not increase health care premiums to the point where community access isn't severely negatively impacted. Hope this helps.
    Nov 20 0
  • Agilent Technologies expatriate
    Pharma prices had been deregulated.
    Nov 20 0
  • Genentech livy
    Seems that in contrast to other governments, US govt hasn’t been as aggressive at setting the prices, and instead lets “the market” do it
    Nov 20 0
  • Intel D’s🥜
    I had no idea it was pharmacy-dependent.
    Nov 20 0
  • Gilead Sciences NlIs78
    Profit.
    Nov 19 0
  • Microsoft NpSb08
    Welcome to free market
    Nov 19 0
  • AT&T MsdR32
    They are effectively randomly priced based the amalgamation of multiple companies desires to profit via volume and margins.
    Nov 18 0

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