No not at all. “Self pay” was your status and those people pay the highest rates. This is true for almost all US healthcare. Being self pay is basically like going to a car dealer and paying MSRP with no negotiation or rebates, etc.
The pharmacy has agreements with wholesalers (sometimes directly with manufacturers) that determines their cost structure of inventory. This includes discounts and rebates and a lot of other cost reductions but All these drugs have sticker price. Insurance companies drive volume and can decide which pharmacies their patients use, thus they can negotiate prices as well. The pharmacy<>insurance transaction is usually going through a PBM, another middle man, that can tell them pretty much instantly what you owe based on your coverage (this is why a pharmacy can give you accurate pricing but doctors offices can’t). There’s a lot of intricacies but the difference between self pay and insured rates can significant. For a generic, I’d be surprised if the pharmacy paid more than 5-20$ but billed you what they could. When insured and you pay 10$, the insurance company has done the math that they will profit on their total generic base even if they lose a little on your purchase (but they probably didn’t).
I work in healthcare finance currently at a pharmacy
Large pharmacies like Walgreens negotiates contracts directly with insurers. Smaller independent pharmacies band together to negotiate as a group.
Because so much discounting and rebates happen on drugs, it's actually really hard for an insurance company to know what a pharmacy paid for a drug. Plus, there are so many drugs, it's hard to negotiate each one. What you end up with are blended reimbursement rates. An insurer might agree to pay 5% below list for all blood pressure medication. The pharmacies then try and get the best price they can. As a result, they make a lot of a handful of drugs, a slim margin on most and lose money on a few.
PBMs that own pharmacies (Express Scripts is the biggest) are in a unique situation where they know both side of the transactions - what the purchase price was so they can set reimbursement.
There are also DIR fees happening where PBMs clawback additional funds later on. That makes knowing the actual margin for a pharmacy really hard to determine until the transaction is already complete.
I’ve worked in a couple of healthcare segments over a couple decades. One thing I’ve come to learn is things can never be simple. I think economic complexity somehow adds s ton of system cost. If nothing else it adds layers of middlemen
If you don't have insurance you just default to the list price.
However that is changing. I can't remember the company, but one pharmacy is starting a cash pay discount program.
They get insanely large profit margin and its pretty much a result of years of lobbying and hard-to-get-in type of market. You are absolutely right with your hopes and when Amazon finally kicks in you will see massive "discounts" from Wallgreens CVS etc al... while they will still rack up nice profits! The whole idea behind Amazon looking deep into disturbing this market is exactly the fact how much lobbying and deals-behind-the-curtain are being made jack up the pricing.
PS. A friend of mine works high in ranking in Wallgreen and all upper management is truly losing sleep over this.
PS2. Same situation applies to aviation. All major players are in shenanigans in price gauging (they simply agree NOT to lower the price) that's why the price of oil went down over 50% meanwhile your average ticket went up 15%. With so much money on hands, I would hope Amazon will eventually disturb flying market in USA; we need it.
During a job switch I had a couple of weeks were I was covered, but before I got my new insurance ids I paid full price (then reimbursed in full afterward.)
A very common generic drug I had a $10 co-pay for, was $139 without insurance at the chain pharmacy I went to. Is this ultimately what the insurance company is paying out?
I was shocked. I thought the generic would be mass-produced and only cost, maybe, a few dollars over my $10 co-pay. I suppose of that $139 dollars, only a tiny fraction was the actual drug price; the rest goes into salaries for the pharmacists, business costs and profit. It still seemed pretty outrageous to me.
If a company like Amazon ends up only charging back to the insurance company a lot less, on a mass scale, it would hopefully reduce overall insurance costs.