This is Part 6 of a 6 Part Series By Erin L. Albert, MBA, PharmD, JD, DASPL
“To understand why a medication costs $10 for one person and $1,000 for another under the exact same plan design, one must examine how drug formularies handle money at the counter—and how modern pricing structures, like the Mark Cuban Cost Plus Drug Company (MCCPDC) bolt-on model, attempt to disrupt that framework.”
We are walking on the winding, obscure, hidden path of an electronic prescription in the USA in 2026 at the request of several pharmacy schools through this series.
Parts 1-5 are here:
Part 1 – The start of the series: Part 1
Part 2 – Electronic Health Record to Pharmacy: Part 2
Part 3 – Networks, and Can the pharmacy even fill the script? Part 3
Part 4 – How the drugs even made it to the pharmacy shelves? Part 4
Part 5 – Let’s fill it (finally)! Part 5
Today, we’re going to focus on what patients actually pay – at the counter – after the prescription has been filled, and how, and who, calculates those numbers.
When a patient stands at the pharmacy counter, the price they are quoted for a prescription is rarely, if ever, a simple reflection of what the drug cost to make. Instead, it is the end product of a complex web of wholesale acquisition costs (WAC), Average Wholesale Prices (AWP) and discounts, formulary design, Pharmacy Benefit Manager (PBM) Maximum Allowable Cost (MAC) lists, PBM drug rebates, switch/hub/copay programs set forth by manufacturers, and cost-share mechanisms. (BTW, Part 4 of this series handled what pharmacies actually pay for a drug to be on their shelves, which is radically different from how these drugs are calculated when PBMs are involved.)
To understand why a medication costs $10 for one person and $1,000 for another under the exact same plan design, one must examine how drug formularies handle money at the counter—and how modern pricing structures, like the Mark Cuban Cost Plus Drug Company (MCCPDC) bolt-on model, attempt to disrupt that framework.
1. What the Patient Pays and Why: Cost-Share Mechanics
Patient out-of-pocket costs at the point of sale are governed by three primary plan mechanics with a commercial employer health plan:
Deductibles: The annual amount a patient must pay out-of-pocket before the insurer begins covering costs. For high-cost brand-name or specialty drugs filled early in the plan year, patients are exposed to the full negotiated rate (or list price) until this threshold is met.
Copayments (Copays): A fixed dollar amount (e.g., $15 for generic, $50 for preferred brand) assigned based on the drug’s formulary tier.
Coinsurance: A percentage of the drug’s total cost (e.g., 20% to 50%), commonly applied to specialty tiers. On high-cost specialty drugs, coinsurance can result in hundreds, thousands, or tens of thousands of dollars owed per refill. A Drug Formulary – is a menu of drugs that a PBM covers on a prescription program. More below. Tiers are what category of drug they are, and patients are encouraged to use lower cost lower numbered formulary tiers before moving up to higher cost tiers. Generics, for example, are typically lowest tier and least costly. Drug Formularies are set forth by PBM Pharmacy & Therapeutics (P&T) Committees – which is a panel of healthcare professional who determine if, or where, a drug should be tiered on a Drug Formulary and operate under a PBM, or may be independent contractor working with the PBM.
Drug Formularies: The Invisible Hand That Determines What Medicine We Take
Ask most patients what a drug formulary is, and you’ll probably get a blank stare. Even many healthcare professionals only think of formularies as “the list of drugs my insurance covers.” In reality, a formulary is one of the most powerful—and least visible—forces shaping healthcare in America. It influences what physicians prescribe, what pharmacists dispense, what employers spend, what manufacturers develop, and ultimately what medications patients receive.
A formulary is much more than a list. It is a blueprint for how prescription drugs are managed, financed, and accessed. At its core, a formulary answers a series of deceptively simple questions:
Is this medication covered?
If it is covered, under what conditions?
How much will the patient pay?
How much will the pharmacy be reimbursed?
Will the physician need prior authorization?
Is there a less expensive or “preferred” alternative?
Every prescription written in the United States encounters these questions in one form or another.
Formularies Were Born from Good Intentions
The original purpose of formularies was both clinical and practical. Healthcare organizations needed a systematic way to identify medications that were safe, effective, and evidence-based. Pharmacy and Therapeutics (P&T) Committees—typically composed of physicians, pharmacists, and other clinicians—reviewed scientific literature, FDA approvals, comparative studies, safety profiles, and treatment guidelines to determine which medications should be recommended.
For decades, the guiding principle was relatively straightforward: choose the drugs that provide the best outcomes for patients while using healthcare resources responsibly. That mission still exists today. But over time, the economics of prescription drugs have become increasingly complex.
Today, Formularies Are Also Financial Documents
Clinical evidence still matters, but financial considerations have become inseparable from formulary design.
Manufacturers negotiate with pharmacy benefit managers (PBMs), health plans, and other purchasers through rebates, administrative fees, market-share agreements, and various contracting arrangements. Those agreements can influence where a drug is placed within a formulary—or whether it appears on the formulary at all.
This creates a reality that often surprises patients: two medications that are clinically very similar may receive very different coverage because their underlying financial arrangements differ.
For employers, this complexity can make it difficult to understand the true cost of their pharmacy benefit. A lower list price does not always translate into the lowest net cost, and a preferred drug is not always the least expensive medication available in the marketplace.
The Formulary Is Really a Rulebook
Most people imagine a formulary as a simple list. In practice, it functions more like a detailed instruction manual.
There are Open and Closed Formularies as well – differences are below, and on self-funded employer plans as we’ve discussed throughout this series, the plan sponsor or employer plan fiduciaries choose between an Open or Closed drug Formulary for the Plan:
Many formularies assign medications to tiers. Lower-tier drugs generally require smaller patient copayments, while higher-tier medications cost patients more out of pocket – examples are below:
Additional rules often accompany these tiers. A patient may need prior authorization before coverage is approved. Another patient may have to complete step therapy—sometimes called “fail first”—before gaining access to a newer medication. Quantity limits may restrict how much can be dispensed, while diagnosis or age restrictions determine who qualifies for coverage. An example of step therapy is below for lowering cholesterol from AI:
These tools are designed to promote appropriate utilization and manage costs. At the same time, they can add administrative complexity for physicians, pharmacists, and patients.
Every Stakeholder Feels the Impact
For physicians, formularies influence prescribing decisions and create additional administrative work. For pharmacists, formulary changes can mean inventory adjustments, therapeutic substitutions, claim rejections, reimbursement challenges, and lengthy conversations with frustrated patients. For employers, formularies have become one of the largest drivers of healthcare spending. For patients, they often determine whether a medication is affordable—or even accessible.
Most patients never realize that a prescription changed because of a formulary decision rather than a clinical one.
A New Conversation Around Transparency
Over the past several years, employers, plan sponsors, pharmacists, and policymakers have begun asking more difficult questions about how formularies are constructed.
· Should medications be preferred because they generate the largest rebate?
· Or should they be preferred because they represent the lowest total cost to the healthcare system?
· Should pharmacy benefits reward transparency instead of complexity?
These questions are fueling growing interest in transparent pricing models, acquisition-cost reimbursement, and alternative approaches that reduce reliance on opaque rebate structures.
Rather than focusing primarily on negotiated rebates, some newer models emphasize predictable pricing, visible acquisition costs, and simpler reimbursement methodologies. Their goal is to align incentives around the actual cost of medication rather than the financial flows that occur behind the scenes.
The Future of Formularies
Formularies are not going away—and they shouldn’t. Every healthcare system needs a thoughtful method for evaluating safety, effectiveness, and value.
But the future of formulary management is likely to look different from the past.
Artificial intelligence is beginning to help identify patients who may benefit from individualized therapy. Biosimilars are expanding treatment options while introducing new pricing dynamics. Employers are demanding greater transparency, and pharmacists are increasingly advocating for reimbursement models that better reflect the true cost of dispensing medications. Pharmacogenomics, or the study of how your unique genetic code affects the response to medications are now more common in practice for patients to identify better use of medications for particular genetic profiles.
Perhaps most importantly, patients are becoming more informed consumers. They are asking why one drug is covered while another is not. They are comparing cash prices with insurance prices. They are beginning to recognize that “covered” does not always mean “least expensive.”
The formulary of tomorrow may be judged not only by its ability to control costs, but also by its ability to build trust. Because in the end, a formulary isn’t simply a list of medications. It’s a reflection of what a healthcare system values—and who ultimately benefits from the decisions it makes.
As an aside, at Mark Cuban Cost Plus Drugs, we do not have a drug formulary. We simply have a drug list. We will sell any and all FDA approved prescription drugs that we can gain access to, as we believe we should not be a stop between you and your provider.
Now, back to your healthcare plan.
BTW, when you have “Open Enrollment” for your health insurance options with your employer, the employer as the health plan administrator is required by law to provide to you what’s called an SBC – Summary of Benefits and Coverage. This document tells you what your deductibles and out of pocket maximums are for your health plans. It should also tell you who your plan’s PBM is and where to find a copy of the Drug Formulary with tiers.
Behind the scenes, your company has already negotiated rates with the PBM on rates for paying for prescription drugs. There are different scales for payment and payment benchmarks – like Average Wholesale Price (AWP) discounts for certain categories for drugs, or pricing based upon Wholesale Acquisition Cost (WAC) of drugs. Medicaid, for example typically uses WAC and/or something called NADAC (National Average Drug Acquisition Cost) pricing, which is a national cost pricing benchmark.
Brand drugs used on the Drug Formulary are even more complex on what’s actually paid due to Drug Rebates from manufacturers. And medical drugs – drugs that are infused at a doctor’s office, infusion center or outpatient setting – are priced a completely different way using a price benchmark called Average Sales Price or ASP (published by the Center for Medicare and Medicaid Services), and are typically administered by the medical carrier or Third Party Administrator on medical benefits, rather than PBM. But—the bottom line here while complex, is that pricing negotiated between the PBM and the employer is rarely related to actual cost of the drug.
Because high deductibles and steep coinsurance rates often lead to prescription abandonment, pharmaceutical manufacturers introduced copay cards and coupons to “buy down” or reduce the patient’s out-of-pocket burden at the register. What is interesting is that these programs are often applied after PBM adjudication, at the switch, before the claim returns to the pharmacy (a process we explained back in Part 5):
Once the coupon exhausted its annual limit (e.g., $6,000), the patient had already satisfied their deductible, leaving the insurer to cover the remainder of the year. This has been a hotly contested area in law—whether or not these discounts should be applied to a patient’s deductible and/or out of pocket total – I’ll let you go down that rabbit hole with your favorite AI to learn more.
Historically, every dollar paid by a manufacturer copay card counted toward the patient’s annual deductible and out-of-pocket (OOP) maximum. Today – ? It depends upon the plan and what is included in the Summary Plan Description, or SPD. A Summary Plan Description (SPD) is a legally required document that explains your health insurance or retirement plan benefits in plain, easy-to-understand language. It serves as the primary guidebook detailing what the plan covers, how it operates, and your rights as a participant.
The SPD is required by law under ERISA, which is a federal law that governs healthcare and retirement plan administration that we mentioned back in Part 1:
2. PBM Countermeasures: Brand and Specialty Drug Accumulators and Maximizers
Recognizing that copay cards shield patients from formulary tiering signals and shift the long-term cost to plan sponsors, and the fact that most coupon copay programs are controlled at the switch, after the PBM processes a claim, PBMs developed specialized cost-adjustment programs called Copay Accumulators or Copay Maximizers.
Copay Accumulators
Under a copay accumulator program, the pharmacy accepts the manufacturer coupon to lower the patient’s immediate out-of-pocket payment, but none of the coupon value is credited toward the patient’s deductible or OOP maximum.
The Impact: When the coupon’s maximum value runs out mid-year, the patient discovers their deductible balance is still completely intact. They are suddenly hit with a “copay cliff”—owing the full monthly cost-share out-of-pocket before receiving further coverage. This can be horrifying if the patient is on a very expensive drug and a complete surprise.
More than half of US states have banned Copay Accumulators for this reason. (At the time of this writing in August 2026, 26 states have banned them.)
Copay Maximizers
Copay maximizers go a step further. PBMs reclassify targeted specialty drugs as “non-essential health benefits” under the Affordable Care Act (ACA), which exempts them from federal annual out-of-pocket limitations.
The Impact: The plan calculates the maximum annual value of the manufacturer’s copay assistance program (e.g., $12,000/year) and divides it evenly over 12 months ($1,000/month). The patient pays $0 out-of-pocket, but the PBM successfully extracts 100% of the manufacturer’s support funds while keeping the plan’s standard deductible completely uncredited.
Copay Maximizers, unlike Copay Accumulators, don’t leave a patient with a huge check in the middle of the plan year to pay.
How They Interact With (and Undercut) the Deductible
Both programs fundamentally alter the financial promise of health insurance:
Undercutting Deductible Progress: They ensure that third-party money cannot be used to satisfy plan deductibles.
Exhausting Assistance: They drain manufacturer assistance funds directly into plan/PBM coffers without advancing the patient’s coverage status.
Driving Abandonment: Patients who rely on assistance often abandon therapy when coupons run out and the full deductible is re-exposed.
3. How the MCCPDC “Bolt-On” Pricing Model Distrusts the System
The Mark Cuban Cost Plus Drug Company (MCCPDC) Cost Plus Drugs Affiliate Pharmacy Network approaches pharmaceutical pricing from a fundamentally different angle: bypassing the traditional rebate-driven PBM supply chain entirely.
Example of Mark Cuban Cost Plus Drugs Affiliate Pharmacy Network Lease Bolt on Pricing Model
The Cost-Plus Formula
MCCPDC operates on a transparent mathematical formula rather than variable, confidential discounts:
Manufacturing/Acquisition Cost – identified from the Cost Plus Drugs Marketplace
+ 15% Markup
+ $12 Pharmacy Dispensing Fee (or more – $14 cold chain/complex REMS, or $25 administration fee for vaccines given on the MCCPDC drug list.)
The “Bolt-On” Integration Model
Traditionally, MCCPDC functioned strictly as a direct-to-consumer cash store that did not interface with health insurance. However, as self-insured employer plan sponsors sought relief from escalating drug spend, MCCPDC developed bolt-on integration pathways (often partnering with transparent, pass-through PBMs.
By bolting MCCPDC directly onto an existing employer benefit plan, the employer offers MCCPDC as an alternative fulfillment option. No coupons, no rebates.
4. The Friction Point: “Shoeboxing”
Despite the price advantages of direct-to-consumer cash options and bolt-on models, a major operational challenge remains: shoeboxing.
The “Shoebox Effect” in Pharmacy Claims
In pharmacy benefit design, the shoebox effect refers to what happens when patients purchase prescriptions outside their health plan’s primary electronic adjudication network (e.g., buying a drug via MCCPDC cash pricing, or on www.teamcubancard.com.) This happens a lot these days when MCCPDC pricing cash is less than a patient’s copy or coinsurance, and/or if prior authorization is needed for a prescription. (MCCPDC programs do not have prior authorizations.)
When a transaction does not clear through the primary PBM switch at the register:
Manual Claim Friction: To get that cash purchase credited toward their annual health insurance deductible, the patient must manually fill out paper claims, attach physical receipts, and submit them to their PBM or Medical Third Party Administrator (TPA). The Medical TPA is often the entity in charge of the patient’s deductibles and out of pocket maximums – not the PBM, which further complicates matters.
Abandoned Receipts: Because manual submission is tedious and confusing, the vast majority of these receipts end up buried in a drawer or literal “shoebox” and are never filed. Carriers intentionally make this process hard, and/or charge the employer sponsor hefty fees to apply these receipts to deductibles and out of pockets.
The Uncredited Spending Trap: As a result, the patient pays $15 or $50 cash out-of-pocket for cheaper drugs, but their plan deductible progress stays at $0. If they later require a major medical procedure or a drug only available through traditional channels, they must start their deductible from scratch.
HSA “Shoeboxing” (The Silver Lining)
In the context of Health Savings Accounts (HSAs), “shoeboxing” takes on a deliberate tax-strategy meaning. Patients who pay out-of-pocket cash for low-cost medications (via platforms like MCCPDC) save their receipts in a “shoebox” (or digital folder) without taking an immediate HSA reimbursement.
Because IRS rules place no time limit on when an HSA reimbursement must occur, the patient allows their invested HSA funds to grow tax-free for decades, retaining the option to withdraw tax-free reimbursements against those old drug receipts years into the future.
The Path Forward
The money spent at the pharmacy counter is governed by a push-pull dynamic between manufacturer support, PBM cost-containment programs, and emerging transparent pricing platforms.
While copay accumulators and maximizers attempt to manage costs by closing loopholes in traditional formularies, bolt-on cost-plus models like MCCPDC attack the root cause by lowering the base price of the drug itself. For these modern models to achieve maximum impact, benefits administration must solve the “shoeboxing” problem—ensuring that transparent cash-based savings seamlessly sync with a patient’s broader health plan deductible.
So What? Why Do We Care?
The price a patient pays at the pharmacy counter has very little to do with what a medication actually costs. Instead, it is determined by a complicated system of drug formularies, PBM contracts, rebates, copay assistance programs, deductibles, and opaque pricing rules that most patients—and many healthcare professionals—never see.
Drug formularies were originally created to promote safe, effective, evidence-based prescribing. Today, they have evolved into financial management tools that often prioritize rebate economics and contracting arrangements alongside clinical considerations. That means the “preferred” drug is not always the least expensive drug, nor necessarily the one that creates the greatest overall value for employers or patients.
At the pharmacy counter, patients frequently experience this disconnect firsthand. High deductibles, coinsurance, prior authorization requirements, and formulary restrictions can make essential medications unaffordable, even when lower-cost alternatives exist. Manufacturer coupons help some patients temporarily, but PBM accumulator and maximizer programs increasingly redirect those assistance dollars without reducing a patient’s deductible, leaving many patients vulnerable to unexpected costs later in the year.
Transparent pricing models, such as the Mark Cuban Cost Plus Drug Company bolt-on approach described in the article, represent a different philosophy. Rather than lowering prices through rebates after an inflated list price is established, they begin with the actual acquisition cost of the medication and apply a transparent markup. The result is simpler pricing, fewer formulary distortions, and potentially lower overall drug spending and higher levels of transparency in drug pricing.
However, transparency alone does not solve every problem. Today’s benefits infrastructure still creates friction through “shoeboxing,” where patients paying cash outside the traditional PBM claim flow often fail to receive deductible credit unless they manually submit receipts. Without modernizing benefits administration, patients may save money today but lose valuable deductible progress tomorrow.
The Bottom Line
The future debate in pharmacy is no longer simply about which drug costs less. It is about which pricing system deserves trust.
As employers demand transparency, pharmacists seek fair and sustainable reimbursement, and patients increasingly compare insurance prices to cash prices, healthcare is shifting away from opaque financial engineering and toward models that emphasize actual acquisition costs, predictable pricing, and simpler benefit design. The organizations that can align affordability, transparency, and administrative simplicity will be best positioned to earn the confidence of patients, employers, and plan sponsors alike.
We will continue this series in subsequent posts. This article was co-produced by a human and AI, and edited by a human.