The Insanity of Drug Prices in the USA

Lars Poulsen - 2022-08-28

Updated 2022-09-03

Most people that I know outside the USA live in countries with a fairly sane public health insurance/health care system that includes coverage for prescription drugs. When their doctor prescribes a drug, they go down to the local pharmacy to pick it up, sometimes paying a nominal handling fee to the pharmacy. That is not how it works here.

My Recent Experience with American Drug Prices

Recently, I had cataract surgery on both eyes. It is something that most people find they need as they reach my age, and it is a fairly simple outpatient procedure. You are in and out in about 2 hours.

Here in the US, most people who need it are over age 65, and so they are covered by the national health insurance for senior citizens, called MediCare. It pays 80% of the surgery, and almost everyone has a supplemental private "MediGap" insurance that pays the rest.

But for obscure reasons, if you are wearing glasses to correct for astigmatism (an asymmetry of the eyeball), MediCare will not pay for a lens that corrects that. "You have been wearing glasses this long, you can keep wearing glasses after the surgery, too". Of course, most of us want to have the better lens, but you have to pay the extra cost yourself. In my case, the additional pay for the "special extra cost options" added up to USD 2,900 per eye - which I have been told is more that the full operation costs in Denmark, where the public health system picks up the full cost anyway.

My operation was also supposed to fix over-pressure in my eyes, called glaucoma, but at the post-operative follow-up appointment, the first eye still had over-pressure, for which I was prescribed an eye drop, 3 times daily. As the eye surgeon talked to her assistant, I learned that there were at least 3 different drugs, and she was trying to pick one that they might have a free sample bottle of. But since they did not have samples of any of them, she went with the first one. I said I hoped it was not prices like gold, but she said that since there were generic substitutes available, it should not be too expensive. But she did not have access to actual cost information.

First try

I went to the pharmacy to pick it up, and was told that my co-pay (after insurance) would be $437. I told the pharmacy, that that was too much, particularly since the doctor had mentioned that there were alternatives, so I wanted my doctor to find a less expensive one.

Second try

I sent a message to the eye clinic, asking if they could get me a less expensive drug. The clinic assistant noted that I was in the process of switching to another pharmacy, so she sent the prescription to the other pharmacy with an explicit note to dispense the generic version.

I went to the other pharmacy the next day, and they at first could not find any prescription for me, but after some searching said that they did find it, but it was not in stock, but should be in by the next day. I asked what the cost was, and they told me $137. That still seemed high, but at least it was $300 less that the first try.

So I came back a day later, and they still did not have it, and had not record that they had ordered it. They would be closed the next day (Sunday), but "You can pick it up Monday for sure". Which I did. And I paid $187. I was not pleased, but it had now been 4 days since the doctor said I needed it, so I decided not to postpone the process by refusing the drug.

Third Try

A week later, I was headed to the same (second) pharmacy for my Influenza vaccination. As I was trying to schedule a reserved time slot, I came across a website for some discount coupons called GoodRx. These are issued by a type of company called a "Pharmacy Benefit Manager", which acts as a middleman between pharmacies, insurance companies and drug manufacturers to process the strange price games. In exchange for patient data which they can sell the other companies, they can give uninsured patients some of the discounts they have negotiated for the insurance companies. The website asked be to type in the name of a drug, and I typed in the generic name for my eye-drops, and they said "Average retail price: $28.80, price with our coupon $6.64".

I decided to have a talk with the pharmacist; she looked up the record of when I paid $187. Her first explanation was that I paid so much because I did not have insurance coverage; but nobody had asked me about insurance when it was dispensed, and I assumed they had me on file from previous transactions there.

Then she looked at my insurance, and said that this drug was on a list for which the insurance company requires individual approval for each patient, a procedure that the doctor should have initiated when writing the prescription. Maybe that was really why it had not been ordered when the prescription first came in.

She looked at my coupon and said that price was not real. There might be a manufacturer that offered it for under $30, but many of the less expensive manufacturers had suspended deliveries because of COVID and/or supply chain issues. The wholesale price of the generic they could actually buy was very close to what they had billed me. But she ran the coupon against the transaction and said that if I had had the coupon when I filled the prescription, my price would have been around $96. Since it had been more than a week, she could not re-do the transaction, but as a courtesy (and in partial acknowledgment that they had failed to help me as much as they could), she offered to refund me the amount over $100.

Another Ending

Two days after I got the partial refund, I received a letter from the insurance company at my home. It was send by postal mail around the time I had picked up the prescription, and it said that they had approved the generic version of the drug for my use; this authorization good for as many refills as my doctor prescribes.

Of course, I still do not know what the price will be if I show up at the pharmacy with this letter in my hand.

Reality Check

Since my bottle of drugs seemed to be nearly empty, I asked my eye doctor if I needed to refill the prescription or I could go back to my "old" drops. The office said to fill it using the authorization letter, and if that was too expensive, get back in touch. So I went to ask the pharmacist, who said that

Our health insurance systems are absurd!!

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