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Drug companies are using price discrimination to maximize their profits. Charge a lot to the insurance companies but less to others with no or poor insurance. I
by pkaye 7y ago
Drug companies are using price discrimination to maximize their profits. Charge a lot to the insurance companies but less to others with no or poor insurance. If a drug only costs $10 to make, they can mark it up to $100 for the insured people. Then insurance charges a $20 copay. The drug company now gives a $20 copay assistance card to make it "free". The net profit is $100-20-10=$70.
This is why California recently made is illegal to provide copay assistance to drugs where generics are available. I have a drug which cost $800/month to the insurance. My copay was $80/month. The manufacturer was so helpful to give me a $75/month copay card to cover this. Around some point the patent expired but the manufacturer continued to give that card out. Eventually the drug became generic and my pharmacy offered the generic version at $10/month. So my copay is higher but insurance cost is much lower. In fact the original manufacturer bugged me to petition the state legislature to change back that law.
- elihu 7y agoIt also can go the other way. I was once quoted two prices for a CT scan because they weren't sure if my insurance would cover it. If it did, they'd bill one amount to the insurance company. If they didn't cover it, I would be billed directly for an amount that was somewhere around double what the insurance would have been billed. I got the CT scan somewhere else.
- pkaye 7y agoInsurance companies negotiate down prices so the hospitals jack up the sticker prices to give room for negotiation. I've read that hospitals typically get 20-30% of what they bill.