Understanding Your Prescription Drug Costs

July 6, 2017

It’s not easy to decipher the ins and outs of prescription drug costs.


There aren’t many Americans who understand the process and the players involved, as well as the effect a competitive marketplace has on lowering medication costs for you as a consumer.

One example of the behind-the-scenes negotiations is the negotiations that employers, health plans and pharmacy benefits managers go through in order to secure discounts from drug manufacturers. This has a great impact on the amount you have to pay and controls increases in premiums.

The bottom line is your bottom line. You need to have a grasp on the process and know how it affects your personal costs. Understanding that there are people working for your best interest can add a sense of security as well.

The role of competition

Competition in the pharmaceutical industry is different than in other enterprises. In other areas, you, as the consumer, are deciding mainly between two products or services that do the same thing. You can compare and contrast, making the choice that best suits your budget and needs.

Take a look at how competition in the prescription drug field varies from other industries and how those differences affect you personally:

  • A prescription drug product won’t have a comparable counterpart right away. Once a new drug arrives on the market, there’s a period of time during which there is no competition. The company can capitalize on being the only source of the drug, jacking up the drug’s cost.
  • There are different forms of the same product. When a drug loses its patent, other companies are able to swoop in and start producing a generic version that is significantly less expensive. Providers will then begin prescribing the lower-cost drug.
  • The relationship between health plans and drug manufacturers. Health plans will work to make sure the cost of new therapies put out by drug companies is as affordable as possible and that they’re available to their patients who could benefit from the treatment.

The behind-the-scenes bargaining of pharmaceutical companies, health plans, and employers should remain effective in keeping your prescription drug costs down.

However, there is something you can do to reduce spending.

What you can do to cut costs

Another means of keeping drug expenditures reasonable for yourself and your family is to seek the help of a healthcare expert.  

As retirement age nears, the costs associated with prescription drugs and other healthcare for that chapter of life become an urgent issue.

It can be a confusing area to navigate and getting help from someone who understands the market is crucial.

Here are some of the reasons that getting help from a health insurance expert will ease these burdens:

  • You need understanding. Because a professional knows the ins and outs of the industry, she knows how to explain tricky concepts to you in a way that makes sense. She’ll be able to discern your needs and make sure you aren’t paying for coverage that you don’t need.
  • You need a guide for the long haul. Personal connections are important to you as a consumer. It instills a sense of security when you know you can come back to the same person to help down the road when you need to make changes to your policy or another issue that comes up.
  • You need a mediator. If there is a problem, the expert you work with an advocate for you in the event of a discrepancy. This kind of help is invaluable when coverage that you deserve is being denied, for example. Ensuring that you don’t pay for services you shouldn’t have to is also a big deal.

Understanding how drug costs are set and what you can do to keep your own expenses as low as possible is important.

Knowing that there are people working for your best interest behind the scenes, on a broad scale or an individual one, is a good feeling!

Do you have an expert you can rely on to help you keep prescription drug costs down?

Speak with One of Our Advisors