Understanding Prescription Drug Costs
One of the chief areas of expense during treatment is medication. One can often see that the price of a prescribed drug differs amongst pharmacies. So what are the factors that cause this variation? In this article, we will carry out a brief discussion on understanding the prescription drug costs and the reason behind their price variation.
If we break down the whole thing, three factors decide the cost of a prescription drug claim. They are:
1. Ingredient cost
It is the total cost, which a pharmacy pays the company itself, or a vendor, to buy a particular drug(s).
2. Pharmacy cost/ markup
This percentage of cost is charged based on the expenses involved in running a pharmacy. It also includes determining a profit margin.
3. Dispensing cost
Dispensing cost or dispensing fee is the final professional fee being charged on a drug by a pharmacy. After this step, these drugs are allowed to be sold under licensed pharmacists in other dispensaries. Furthermore, cooperating with doctors, healthcare providers, etc., is done after charging the dispensing fee.
NOTE: Pharmacies indeed have the right to set the pharmacy markup cost and dispensing fee, according to their preference. Provided, these charges would not exceed the stipulated limits capped by the government. Because of this, the costs of a prescription drug(s) vary amongst pharmacies so much.
For Example, Two Pharmacies Operate In An Area
The price breakdown of Pharmacy 1 is:
- Ingredient cost: $15;
- Pharmacy markup: $2;
- Dispensing fee: $8
Therefore, the price of a drug in Pharmacy 1 would be $25.
Now, Pharmacy 2 looks somewhat like this:
- Ingredient cost: $18;
- Pharmacy markup: $5;
- Dispensing fee: $6
So, $29 is the price of the same drug in Pharmacy 2.
Also read: Prescription Drug Costs Breakdown
It is also a point to note that availing of Group Benefits plans often costs a lot less than individual drug insurance plans. But that, too, is a limitation. Nowadays, there are expensive prescription drugs available for some very rare cases, which automatically increase the premium amount. And these drugs are not included in these group benefits plans, so the extra bucks demand the heaviness in your pockets!
But why did many employers change their group benefits plans? Read here.
Steps to Reduce Prescription Drug Cost
But, there are certain steps you can follow to reduce the cost of the prescription drugs. They are:
Never hesitate to ask about the dispensing fee of prescription drugs at the pharmacy. It is one of the factors which cause price variations.
Do not ever settle for a single pharmacy. Look around other ones and compare the prices to get the best-suited price for your prescription within your budget.
Not much of an overwhelming thing to do, though! All you have to do is buy a stock of the medications you require for the long term. For example, prescriptions for high blood pressure, diabetes, etc., require a long-term intake of medications. It is economical to buy the full stock of a month rather than buying it individually.
Also read: Prescription Drug Choice
Bonus: PDF – Benefits of Understanding Prescription Drug Costs