When you pick up your prescription from your pharmacy, it’s important to know that the final cost is the sum of several components, not just the price of the drug your doctor recommended for you.
There are several additional costs that get added to the actual price of the medicine to round up your total claim amount.
First, there are markups added to compensate the distributor and the pharmacies that stock the product (i.e. wholesaler and pharmacy), as well as a pharmacy dispensing fee.
The markup is usually a percentage added to the cost of the drug, so this amount varies considerably depending on the actual cost of the drug dispensed.
The dispensing fee is normally a fixed amount charged by the pharmacy regardless of the cost of the drug prescribed. For a low cost prescription, the dispensing fee can sometimes be even greater than the actual drug cost.
There can be variability in the amount of dispensing fees and markups charged by each pharmacy, and even within each pharmacy these often vary significantly between the type of payer (no reimbursement coverage, or government provided plan (public), or employer-sponsored benefit plan (private). Generally speaking, those who pay out of pocket and employer-sponsored plans are charged higher dispensing fees and mark-ups. Depending on the province, generally this ranges between $12-$16 of dispensing fees per prescription, and 10-15% of markups.
It’s important to know that these costs can vary based on where you pick up your medication. Employers can have specific arrangements with insurance providers to negotiate lower fees and markups with pharmacy chains in order to ensure cost effectiveness. Other costs can include the duration of treatment, the frequency of dispensing, potential for non-adherence, and the cost of alternatives being replaced, as well as indirect costs such as the productivity/quality of life cost of not taking the prescribed medicine.
Secondly, the frequency of dispensing also impacts the total cost. A chronic medication which is taken continuously could potentially incur higher total prescription costs over the long term if the volume of prescription is smaller and requires more frequent refills.
Thirdly, non-adherence to a prescribed drug will incur extra costs due to waste, as well as due to poorer health outcomes and productivity losses.