The price pharmacies report
When a pharmacy bills a government program, it must report its usual and customary price. In this setting, that generally means the amount a cash-paying customer would pay for the same medication.
The issue becomes more difficult when the pharmacy offers a discount program that anyone can use. For example, a generic drug might be available for $4 through a public discount program, while the pharmacy also lists a higher standard cash price. The question is whether the $4 amount becomes the pharmacy’s usual and customary price.
That question led to litigation, including False Claims Act cases. Pharmacies maintained that discount programs were promotional offers separate from their standard cash prices. Under that position, the discounted amount was tied to a special transaction. It was not, they argued, the price the pharmacy ordinarily charged cash-paying customers.
Relators took a different position. They argued that a price available to any walk-in customer is, by that fact, usual and customary. If a pharmacy reported a higher amount to a government program, the program could pay more than a cash customer would pay for the same medication.
Courts largely agreed with that view, and the cases resulted in substantial settlements. The central issue was whether a public discount was genuinely separate from the pharmacy’s ordinary cash pricing. If the price was available to customers generally, it could be treated as a cash price rather than as a limited promotional exception.
Why availability matters
Calling a lower amount a “promotion” did not resolve the issue. A discount program open to anyone can operate as an actual cash price even when the pharmacy uses different language to describe it.
The same purchase can therefore be understood in two ways. Under the pharmacies’ position, the standard cash price remains the usual and customary price, and the discount is an exception. Under the relators’ position, the relevant amount is the price available to any customer. The label attached to that amount does not change its availability.
This difference matters because a single prescription can have more than one price at the same pharmacy. The amount charged through a government program may differ from the pharmacy’s standard cash price. A lower amount may be available through a discount program that is open to anyone.
For shoppers, the practical point is that a price label does not establish whether another lower price is available. A pharmacy may call an amount a discount, but that amount can still be the price a customer can obtain at the counter. Availability matters more than the description used in the store’s pricing system.
A customer who sees a standard cash price should therefore ask whether the pharmacy offers another cash option. The answer may depend on the pharmacy’s discount program, the medication being purchased, and the way the purchase is processed. The listed standard price does not necessarily show the lowest amount the pharmacy will accept.
Why the payment route matters
The litigation concerned the amounts pharmacies must report to government programs. It also illustrates a common pricing issue for people paying for prescriptions. A prescription processed through insurance can cost more than the same prescription purchased with cash. The insured route is not always the least expensive option.
This does not mean that insurance is always more expensive or that a discount program is always the better choice. The available payment routes must be compared for the particular prescription. A customer may receive one price through insurance, another as the pharmacy’s standard cash price, and a lower price through a discount program. Which amount is lowest depends on the route used.
The same comparison matters when considering modern medication costs, because the difference between payment routes can be large and the least expensive route is often not the insured one. The relevant question is not just the advertised price. It is what the customer will pay through each route available at that pharmacy.
A pharmacy’s usual and customary price can affect government billing. A shopper’s immediate concern is the amount charged at the counter. These questions overlap because both involve prices available to cash customers, but they are not answered simply by reviewing the amount generated after an insurance claim.
The issues are also discussed in Pharmacy Qui Tam Based On U&C Price Billing Survives Motion to Dismiss.
What shoppers should compare
Medication costs cannot be understood from a single number. A pharmacy may call one amount its standard price and another a discount, while the customer sees both as possible ways to buy the same prescription.
Before choosing a payment method, a shopper should ask what the pharmacy charges when insurance is not used. The shopper should also ask whether the pharmacy offers a discount program and whether any customer can use it. If the program is open to walk-in customers, that availability provides useful information about the pharmacy’s public cash pricing.
The answer may vary by pharmacy and by prescription. A discount program can also change over time, so a price found during an earlier purchase should not be assumed to remain available. The comparison begins with the same question each time: what will this pharmacy charge through each payment route the customer can use?
The insured price is only one possible price. Checking the cash price and any discount available to the public may show that another route costs less before the prescription is filled.