Devon Herrick

Drug benefits are nothing new. About three-fourths of the time when you go to the drug store to fill a prescription, a health plan is paying your bill. Long before you walk into your local pharmacy, your health plan has already negotiated prices with drug companies, dispensing fees with pharmacy networks, and contracted with a mail-order pharmacy to provide maintenance medications for chronic conditions. Regardless of how your drug plan is structured, health plan members –that’s you and me – get most of our prescriptions at local pharmacies, which are reimbursed by a health plan in ways similar to how doctors are reimbursed for office visits. Increasingly, our choice of drug stores is being narrowed to extract price concessions from pharmacies bidding to be among the smaller number of exclusive network pharmacies. Drugstores at risk of being excluded are lobbying to prevent this.

There’s a lot of money at stake. Americans see doctors more than a billion times each year. About two-thirds of the time when we walk out of our doctors’ offices, we leave with a prescription in hand.

Drugs are a bargain compared to doctors and hospitals. As a nation, we spend three times the amount on hospital services and twice as much on physician care as we spend on drugs. Drugs keep people out of the hospital, delay the need for surgery and often keep us alive years longer than we would have lived. The bottom line is: Drug therapy is the cheapest way to treat most medical conditions. Congress and state legislatures should avoid the well-meaning, but ill-conceived regulations intended to protect consumers, but which often have the opposite result.

More details are outlined in the newly published study, Unnecessary Regulations that Increase Prescription Drug Costs.

Devon Herrick

Devon Herrick is a health economist and a senior fellow at the National Center for Policy Analysis (NPCA).