I agree its not a major %age of the costs for Insurance company. But here's what I think is happening: Manufacturer MFG could sell a drug X at $1 and sell dire

I agree its not a major %age of the costs for Insurance company. But here's what I think is happening: Manufacturer MFG could sell a drug X at $1 and sell directly to 10,000 people at $1, make $10,000 revenue But because of perverse insurance incentives, MFG decides to sell the same drug at $100, and there are 100 out of those 10,000 who can afford an insurance plan that covers the cost for that $100 drug X. So, by jacking up the price the drug company's revenue at the very least, remains intact, or in most cases can get more revenue if the number of rich people with expensive insurance plans is greater than 100. While Insurance companies wont mind paying the $100 since that fear of expensive drug gives them more customers affected by FUD, willing to pay obscene premiums, copays and deductibles. And since many health insurance premiums are subsidized by the employer, the employee doesn't realize the true cost of health insurance, and thinks its a great deal to get a $100 drug for $20. The solution I proposed, will solve this pricing obfuscation to a great extent. Insurance companies cannot justify paying for an expensive drug, if a cheaper one is available. MFG can still price drug X at $100, but if there's a generic variant made in India / Africa / China available for $5, there wont be a market for MFG to sustain. So, there's an incentive for MFG to sell X at < $5, while targeting more coverage instead of just the 100 people covered by expensive insurance plans. I dont see people on either side of the political spectrum in US, asking to fix this problem. Nor has there been much discussion about the same. Hope this concept is evaluated and becomes popular in solving the Healthcare Mess of America.