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I'd be interested in knowing what different pharmacies ultimately charge the various insurance companies for generic drugs. During a job switch I had a couple

by xefer 9y ago

I'd be interested in knowing what different pharmacies ultimately charge the various insurance companies for generic drugs. During a job switch I had a couple of weeks were I was covered, but before I got my new insurance ids I paid full price (then reimbursed in full afterward.) A very common generic drug I had a $10 co-pay for, was $139 without insurance at the chain pharmacy I went to. Is this ultimately what the insurance company is paying out? I was shocked. I thought the generic would be mass-produced and only cost, maybe, a few dollars over my $10 co-pay. I suppose of that $139 dollars, only a tiny fraction was the actual drug price; the rest goes into salaries for the pharmacists, business costs and profit. It still seemed pretty outrageous to me. If a company like Amazon ends up only charging back to the insurance company a lot less, on a mass scale, it would hopefully reduce overall insurance costs.

blaisio 9y ago
$139 is almost certainly not what the insurance company would pay. It's also largely a price determined by the pharmacy itself, not the drug manufacturer.
joering2 9y ago
> Is this ultimately what the insurance company is paying out? They get insanely large profit margin and its pretty much a result of years of lobbying and hard-to-get-in type of market. You are absolutely right with your hopes and when Amazon finally kicks in you will see massive "discounts" from Wallgreens CVS etc al... while they will still rack up nice profits! The whole idea behind Amazon looking deep into disturbing this market is exactly the fact how much lobbying and deals-behind-the-curtain are being made jack up the pricing. PS. A friend of mine works high in ranking in Wallgreen and all upper management is truly losing sleep over this. PS2. Same situation applies to aviation. All major players are in shenanigans in price gauging (they simply agree NOT to lower the price) that's why the price of oil went down over 50% meanwhile your average ticket went up 15%. With so much money on hands, I would hope Amazon will eventually disturb flying market in USA; we need it.
conductr 9y ago
> Is this ultimately what the insurance company is paying out? No not at all. “Self pay” was your status and those people pay the highest rates. This is true for almost all US healthcare. Being self pay is basically like going to a car dealer and paying MSRP with no negotiation or rebates, etc. The pharmacy has agreements with wholesalers (sometimes directly with manufacturers) that determines their cost structure of inventory. This includes discounts and rebates and a lot of other cost reductions but All these drugs have sticker price. Insurance companies drive volume and can decide which pharmacies their patients use, thus they can negotiate prices as well. The pharmacy<>insurance transaction is usually going through a PBM, another middle man, that can tell them pretty much instantly what you owe based on your coverage (this is why a pharmacy can give you accurate pricing but doctors offices can’t). There’s a lot of intricacies but the difference between self pay and insured rates can significant. For a generic, I’d be surprised if the pharmacy paid more than 5-20$ but billed you what they could. When insured and you pay 10$, the insurance company has done the math that they will profit on their total generic base even if they lose a little on your purchase (but they probably didn’t). I work in healthcare finance currently at a pharmacy
- petra 9y ago
  As a professional in this field - how do you think this will play out, assuming Amazon is seriously interested in entering this market ?
  - conductr 9y ago
    Not knowing much about amazons strategy it’s hard to say. I really don’t know why they’d enter this market. The regulations and compliance requirements just doesn’t seem to fit with their business as I understand it. But I think eventually they will want to operate a PBM and negotiate pricing directly with manufacturers
- solotronics 9y ago
  why is this legal? there should be one price no matter who is buying. This would be like charging a certain demographic a different price for food or gasoline.

by xefer 9y ago

blaisio 9y ago

$139 is almost certainly not what the insurance company would pay. It's also largely a price determined by the pharmacy itself, not the drug manufacturer.

joering2 9y ago

> Is this ultimately what the insurance company is paying out? They get insanely large profit margin and its pretty much a result of years of lobbying and hard-to-get-in type of market. You are absolutely right with your hopes and when Amazon finally kicks in you will see massive "discounts" from Wallgreens CVS etc al... while they will still rack up nice profits! The whole idea behind Amazon looking deep into disturbing this market is exactly the fact how much lobbying and deals-behind-the-curtain are being made jack up the pricing. PS. A friend of mine works high in ranking in Wallgreen and all upper management is truly losing sleep over this. PS2. Same situation applies to aviation. All major players are in shenanigans in price gauging (they simply agree NOT to lower the price) that's why the price of oil went down over 50% meanwhile your average ticket went up 15%. With so much money on hands, I would hope Amazon will eventually disturb flying market in USA; we need it.

conductr 9y ago

> Is this ultimately what the insurance company is paying out? No not at all. “Self pay” was your status and those people pay the highest rates. This is true for almost all US healthcare. Being self pay is basically like going to a car dealer and paying MSRP with no negotiation or rebates, etc. The pharmacy has agreements with wholesalers (sometimes directly with manufacturers) that determines their cost structure of inventory. This includes discounts and rebates and a lot of other cost reductions but All these drugs have sticker price. Insurance companies drive volume and can decide which pharmacies their patients use, thus they can negotiate prices as well. The pharmacy<>insurance transaction is usually going through a PBM, another middle man, that can tell them pretty much instantly what you owe based on your coverage (this is why a pharmacy can give you accurate pricing but doctors offices can’t). There’s a lot of intricacies but the difference between self pay and insured rates can significant. For a generic, I’d be surprised if the pharmacy paid more than 5-20$ but billed you what they could. When insured and you pay 10$, the insurance company has done the math that they will profit on their total generic base even if they lose a little on your purchase (but they probably didn’t). I work in healthcare finance currently at a pharmacy

petra 9y ago
As a professional in this field - how do you think this will play out, assuming Amazon is seriously interested in entering this market ?
- conductr 9y ago
  Not knowing much about amazons strategy it’s hard to say. I really don’t know why they’d enter this market. The regulations and compliance requirements just doesn’t seem to fit with their business as I understand it. But I think eventually they will want to operate a PBM and negotiate pricing directly with manufacturers
solotronics 9y ago
why is this legal? there should be one price no matter who is buying. This would be like charging a certain demographic a different price for food or gasoline.