Why Is My Prescription More Expensive With Insurance?

Ashley Brooks
Ashley Brooks12 Dec 2022

Depending on your insurance provider, your prescriptions may or may not be covered. Most Americans have insurance that offers coverage on prescription drugs, but not all medications are covered. Health insurance plans are structured differently, but if your pharmacy collects a copay with your prescription, you may end up paying more for the drug than you would have out-of-pocket because of a concept called “clawback.” 

Mira offers highly discounted rates on over 1,000 medications. A Mira membership starts as low as $25 average per month on average, with access to prescription and lab discounts and affordable urgent care visits. Soon, Mira is expanding its service offerings to provide virtual primary care and telebehavioral health for members at no additional monthly cost! Sign up today!

Why Is My Prescription More Expensive With Insurance?

Every health insurance plan has its policy when it comes to prescription coverage. The breakdown of costs associated with prescription drugs may vary by plan. Depending on your plan structure, you may pay more for your medication if your plan requires you to pay a set copayment to the pharmacy for your medication. Regardless of the cost of your medication, you would be responsible for this copayment, but sometimes your copay could be more costly than the medication itself. This concept is known as a “clawback.”

A copayment on prescriptions assumes that the insurer and the patients share the costs of the drug. Alternatively, when a copayment exceeds the cost of the medication itself, the prescription benefit manager (PBM) keeps the difference as a profit. A study from 2013 found that prescription overpayments amounted to $135 million. In 2019, a series of prescription drug pricing transparency were approved, known as the PBM Transparency in Prescription Drugs Cost Act.

How Insurance Prescription Coverage Works

Prescription coverage varies by insurance plan and may be included with your benefits, or you may be required to pay extra for additional coverage on services such as dental, vision, and prescription coverage. The list of prescription drugs covered in a health insurance plan is called a formulary. Depending on what your health care provider prescribes you, you may have to pay for that prescription out-of-pocket if the drug is not in your plan’s formulary.

The cost of your prescriptions may depend on how the costs are factored into your deductible. Your plan likely falls into one of three categories when it comes to costs associated with medications: 

Drug coverage before meeting your deductible

Health insurance plans may offer coverage on prescriptions before you have met your annual deductible. Often, you may still be required to pay a copayment or coinsurance associated with your medicine. 

Drug coverage after meeting your deductible

A health plan may require you to meet your annual deductible first before your insurance provider helps pick up the costs of your medications; this may mean you have to spend thousands of dollars before your plan helps pick up any costly prescriptions.

Drug coverage after a specific prescription deductible

Some health plans may require a deductible specifically for prescription drug coverage. These deductibles are typically much less than the thousands you must pay for your standard medical coverage. 

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Medicare Prescription Coverage

Different plans exist within Medicare, providing coverage for various medical services. The Original Medicare and Medicare Advantage, also called Part C, offer Parts A and B but does not guarantee Part D, the expanded prescription drug benefit. Medicare Part A includes hospital insurance, while Medicare Part B provides medical insurance. Below is an example of a Medicare Part D prescription coverage tier system: 

  • Tier 1: Has the lowers copayment covering most generic prescription rugs
  • Tier 2: Has moderate copayments for preferred, brand-name prescriptions
  • Tier 3: Has a high copayment for non-preferred, brand-name prescription drugs
  • Specialty Tier: Has the highest copayment for very high-cost prescription drugs

How to Save Money on Prescriptions

According to an NPR poll, nearly half of insured individuals whose plan doesn’t cover their prescription end up not filling their prescription. Almost one-third of insured individuals across all income groups also said that they or someone in their household was told their insurance plan would not cover a drug prescribed by their doctor.

Many online prescription discount services exist for people to use as supplemental coverage or as a stand-alone option to offset the costs of paying out-of-pocket for the total cost of medication. Consider the following tips to optimize your savings on your prescriptions: 

Opt for the Generic Version

Opting for the generic version instead of the brand-name drug can offer huge savings. Generic medications are the same as brand-name drugs in dosage, safety, strength, route of administration quality, and intended use. The significant difference between brand name and generic is the cost. The price difference out-of-pocket comes down to the patent behind the brand name. In 2020 Americans spent approximately $358.7 billion on prescriptions, with a majority being spent on brand-name drugs. This high spending on prescriptions is only supposed to increase; however, Americans can save $8 to $10 billion when opting for the generic version. 

Ask for a Different Medication

Often, a healthcare provider will not know what medications are covered on your formulary or the difference in cost between drugs used to treat the same condition. If your prescription is not covered by your insurance and requires a hefty out-of-pocket cost, ask your pharmacist what alternatives exist. If there are other options, check with your healthcare provider to see if they can prescribe any of these alternatives as a suitable treatment for your medical needs. 

Change Your Pharmacy

Surprisingly, the cost of your medication can vary depending on pharmacies. If you have to pay out-of-pocket, you could try calling around and see if you can find a time to go through your medication list to find the best rates. Try the MiraRX savings calculator to see the most affordable rates are for prescriptions at various pharmacies near you. Mira is a discount service, but the tool provides an example of how the costs of medications differ between pharmacies.

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Prescription Coupon Programs

As previously mentioned, prescription discount services can save you hundreds of dollars on your prescriptions each year. If the medication is only available in brand name form without generic alternatives, you may be able to get coupons directly from the drug manufacturer. Another option is to enroll in a prescription discount program such as Mira. Mira is a health coverage option where you pay for a low monthly fee ranging between $25 - $60 per month for up to 80 percent discounts on thousands of medications. Their online search tool allows you to search for the best rates in your area before you show up to optimize your savings.

Prescription Coverage Frequently Asked Questions (FAQs)

Consider this additional information when it comes to financing your prescription medications.

Can exceptions be made if a drug is not covered under a plan’s formulary?

If you have been prescribed medication not covered under your health insurance formulary, you may ask your insurance provider to cover the medication by submitting a formulary exception form. Your doctor may also need to send paperwork indicating why you cannot take the preferred medication covered under the formulary. Common scenarios where formulary exceptions are accepted include: 

  • An allergy to the alternative medication listed on the formulary
  • Alternative medications do not work with your condition
  • Your doctor decided the medication choices available on your formulary are not appropriate
  • Your doctor believes the use of a formulary medication may escalate an underlying condition

What does the PMB Transparency in Prescription Drug Cost Act aim to do?

The legislation requires the Secretary of Health and Human Services to give the public information regarding rebates, discounts, and price concessions that pharmacy benefit managers (PBMs) negotiate with prescription drug manufacturers, beginning January 1, 2020.  Eighteen states have already passed legislation requiring prescription drug manufacturers to disclose certain price information on their drugs: California, Colorado, Connecticut, Louisiana, Maine, Maryland, Minnesota, New Hampshire, New Jersey, Nevada, North Dakota, Oregon, Texas, Utah, Vermont, Virginia, Washington, and West Virginia. 

How do I claim the Mira prescription discounts?

Claiming the discounts is easy! Either login to your Mira account or sign up for a membership and navigate to your member portal! Within your member portal will be a series of tiles for the different Mira service offerings. Click on the “Rx Discounts” tile. Enter the name, dosage, and quantity of your medication and choose your location. Pharmacies carrying your medication will populate with the lowest option shown first. Click on “Get Coupon,” and you’re all set! 

Bottom Line

If your health plan requires a copayment as part of their prescription drug benefit, you may end up paying more for your copayment than the cost of your drug out of pocket. This concept is called a “clawback,” where the pharmacy accepts the difference as a profit. Recent drug pricing transparency initiatives aim to reduce and make transparent prescription drug costs, but there are many ways to save on prescriptions to avoid overpaying. 

Mira offers up to 80 percent discounted rates on thousands of prescriptions and lab screenings. Members also receive affordable access to urgent care visits and virtual care services comings soon! Individual plans, family plans, or even employer-sponsored options exist. Check out how much you can save on your prescriptions using the MiraRX prescription calculator.

Ashley Brooks

Ashley Brooks works in Healthcare Consulting and graduates with her MPH in September of 2022 from George Washington University, but graduated with her B.S. in Health Science from James Madison University in 2019. Ashley has been with Mira since June of 2021 and shares the passion for creating affordable healthcare coverage for all!