What you pay at the counter is often based on a price almost nobody pays.

Know someone who picks up a prescription every month? Forward this to them.

By Justin Yamashita, MSc. The lab bench, the research site and the companies that run trials: three levels of research, explained without spin.

·        The price on the shelf, called the list price, is often not what anyone pays in the end. It's the starting number before the discounts.

·        In 2022, US prices for brand name drugs ran about 4 times those in other wealthy countries before discounts, and still more than 3 times after. Yet US generics, the cheaper copies sold once a patent runs out, cost less here than in most of those countries. The US pays the most for new brand drugs and the least for old generic ones.

·        Nearly 8 of every 10 prescriptions in the country run through just three middleman companies most people have never heard of.

A month after his pill changed color, Ray’s back at the same pharmacy. Maya came along to carry the bag.

Two refills are waiting. The first is his blood pressure pill, the generic. The pharmacist rings it up- $4.

The second is his inhaler, the brand name one Dr. Okafor started him on in the spring. The register beeps. The screen says just over $300.

Ray looks at the number for a long moment. Then he slides the inhaler back across the counter.

"I'll do without," he says.

If someone you love has ever left a prescription on the counter, send them this. The questions to ask at the counter take 30 seconds.

"Dad, you need that," Maya says.

"Then Okafor shouldn't have picked the expensive one." Ray taps the box. "He picked it. Let him pay for it."

Maya feels the same heat rising. Somebody did this to her father. She almost says it.

Sam the Skeptic and Rooty the Researcher are sitting in, as always.

"So who's the villain?" Sam asks. "The doctor or the drug company?"

"Wrong question this week," Rooty says. "The right one is who touches the price. Watch."

Maya takes a breath. Before she blames anyone, she wants to know one thing: who set this number?

The pharmacist turns her screen so Maya can look.

She can show three things. The list price, the drugmaker's sticker price before any discounts. The tier, the price level Ray's Medicare drug plan puts this inhaler on. At this tier, Ray pays a percentage of the list price.

The third is about the coupon card Maya just found on the drugmaker's website. "We can't use that one with Medicare," the pharmacist says. "Federal law treats a drugmaker's coupon on a drug Medicare pays for as a possible kickback, a payment to steer what Medicare buys."

Then what she can't see. "What his plan actually paid in the end, after the drugmaker's rebates. That number never comes to the pharmacy."

Maya puts it together. Her dad's share was figured from the sticker, not from what the plan paid.

So she asks the one question worth keeping. "Is there a cheaper option in the same family of medicines? And can I call Dr. Okafor about it?"

"Yes and yes," the pharmacist says. "There are other inhalers in the same family, and some sit on a lower tier. Whether one fits your dad is Dr. Okafor's call. I'll hold this one until you hear back."

Ray still has a few days left in his old inhaler.

Rooty turns to Sam. "That's PAUSE. She asked the source. She found the bar, what she'd need to know before blaming anyone. And they looked together."

"So it wasn't the doctor?"

"Dr. Okafor may never have seen that screen."

Plain Talk 029 ended on a question: if 9 in 10 prescriptions are cheap generics, why does the pharmacy counter still hurt? Here are three things you'll hear, checked the skeptic's way.

What people say: "The drug company names a price, and that's what everybody pays."

What's partly true: Companies do set the list price, and brand name list prices in the US are high.

The skeptic's question: Compared to what?

Compared to what gets paid in the end, the list price is often far off. After the sale, drugmakers send rebates, money paid back to the drug plan's middleman, plus other discounts and fees.

Drug Channels Institute, a firm that tracks drug pricing, estimates those rebates, discounts and fees on brand name drugs totaled about $416 billion in 2025. That's roughly $1,200 for every person in the country.

Only three drugmakers publish their average discount. Theirs averaged about 52% off the list price. Picture a $100 tag on a shirt that really sells for $48.

Think of the rate card on the back of a hotel room door. Almost nobody pays it, because almost everyone booked through some kind of deal.

Where the analogy bends: at a hotel, you know you got the deal. At the pharmacy, the deal goes to your plan, and you may never see it.

Here's the catch. Many patients pay coinsurance, a percentage of the price, or a deductible, the amount you pay before coverage kicks in. Both are often figured on the list price. So the discount never reaches them.

That's the line at the top: what you pay at the counter is often based on a price almost nobody pays.

What people say: "It's just me, my doctor and the drug company."

What's partly true: Most people have never heard of a pharmacy benefit manager.

The skeptic's question: Who's behind this, and do they have a stake in the answer?

A pharmacy benefit manager is the company your insurer hires to run its drug plan. It negotiates those rebates. It also builds the formulary, the list of drugs your plan covers and the tier each one sits on.

In 2024, the Federal Trade Commission, the agency that polices unfair business practices, reported that the three largest handled nearly 80% of 6.6 billion prescriptions filled the year before.

Think of a wedding planner who picks your caterer and negotiates the price. If the planner's cut grows when the caterer charges more, you'd want to know.

Where the analogy bends: you hired your wedding planner. Your insurer or employer hired the drug plan's middleman, and you never see the contract.

Critics say that's the problem: when a middleman's pay rises with the list price, it has a reason to favor pricier drugs. The Federal Trade Commission took a version of that argument to court over insulin in 2024. Two of the three biggest have settled. The third is still in court.

A federal law signed February 3, 2026, changes the rules for Medicare drug plans. Their middlemen will get flat fees not tied to a drug's list price, and rebates must pass through to the plan. Those rules start in January 2028, according to the law firm Sidley Austin.

What people say: "Somebody has to pay for all that research."

What's partly true: Developing a drug is expensive, and most drugs that get tested fail.

The skeptic's question: How much evidence is there, and has anyone found the same thing?

Three well known studies counted the failed drugs and the cost of money tied up for years. They don't agree.

A 2016 study from Tufts University's drug development center, built on confidential company data, estimated about $2.6 billion per approved drug. A 2020 study in the Journal of the American Medical Association, built on public company filings, put the middle estimate near $1 billion. A 2024 study put the average under $900 million.

So estimates run from under $1 billion to about $2.6 billion, counted in dollars from different years. At $1,000 a day, $1 billion would last about 2,700 years.

Does that cost set the price? The Congressional Budget Office, Congress's nonpartisan number checker, looked at this in 2021. Once a drug is approved, it wrote, "the price is set to maximize the net revenues from the drug without regard to how much it cost to develop." It also found that when companies expect bigger profits, they invest more in research.

A movie ticket costs about the same whether the film cost $5 million or $300 million to make. The studio still picks which films to make by what it expects to sell.

Where the analogy bends: you can skip a movie. Many people can't skip their medicine.

Both things can be true. Research is costly, and the price isn't a receipt for it.

Brand name list prices in the US are high, and the US pays the most among wealthy countries for new brand drugs.

Many patients' share is figured on the list price, so the discounts never reach them. That's the line at the top of this issue.

Critics say the middlemen's pay was tied to higher list prices. The 2026 law changes that only for Medicare plans, and not until 2028.

I've worked at the lab bench, at a research site, and on the side of the industry that runs clinical trials for drug companies. In the open: I work in clinical research, so my line of work earns money when companies spend on drug research. No company paid for, saw or approved this issue.

Here's what I can tell you in general terms. Research is expensive in ways you never see but I’m trying to explain in this newsletter. A trial means nurses, coordinators, lab work, monitoring visits and years of checking in on every person who volunteers. Most of the drugs we study never make it, and that’s after 90% don’t even make it from pre-clinical to human trials. That money is real, and as a clinical trial project manager, part of my job is trying to keep costs as low on those projects as possible, keeping the quality high, and cutting timelines to get drugs through to the next phase as fast as possible. It’s not always possible to deliver on all three fronts, but the one that myself and others in my industry don’t compromise is patient safety or else there are severe consequences- and rightly so.

But I've never watched a list price get set inside a trial. By the time a drug reaches your pharmacy, the research bill has already been spent. The number on Ray's screen came later, from people deciding what buyers would pay. Then rebates, tiers and plan rules bent it, and none of us on the research side ever touch those.

So when someone tells you a price is high because research is expensive, both halves can be true and still not connect. Ask the question from claim 3. Then ask who set the number.

The questions in this issue, from the full toolkit:

1.      Compared to what?

2.      Who's behind this, and do they have a stake in the answer?

3.      How much evidence is there, and has anyone found the same thing?

For the next time someone says "the doctor picked the expensive one":

·        Ask the pharmacist for the cash price too. Sometimes it's lower than your insurance price, and laws passed in 2018 keep insurance contracts from stopping the pharmacist from telling you. If you're on Medicare, paying cash may not count toward your $2,100 yearly cap, so save the receipt and ask your plan.

·        Ask your doctor whether there's a generic or a cheaper option in the same family of medicines.

·        If you're on Medicare, know the 2026 out of pocket cap ($2,100) and the $35 insulin cap.

·        Ask about the drugmaker's patient assistance program, a program that gives medicine free or at low cost to people who qualify, if you're uninsured or your coverage leaves big gaps.

Have you ever left a prescription on the counter? What happened next, and did anyone explain the price? Reply to this email or leave a comment on the newsletter. With permission, a few of your stories may show up in a future issue.

Seen a health claim that's bugging you? Send it to us.

Know someone who pays for a brand name drug every month? Forward this. It's the question list Ray wishes he'd had.

Or pick a line and use your own link below. It counts toward your Series 1 card.

To a parent: "This explains why your inhaler costs more than your pills, and what to ask at the counter."

Your first referral unlocks the Sam Card, Card 001 of 010 in the Root to Rx collector series.

Every price argument in this issue sits on top of clinical trials, the studies that show whether a drug works and is safe enough to use. Those studies are a real part of the cost, and they only happen because people volunteer.

Some are looking for volunteers right now. You can browse them on our registries page. Looking commits you to nothing.

I’ll never forget one of my first days as a clinical trial coordinator, during a screening visit for a cholesterol medication study, talking with the patient and how she was so hopeful she would successfully make it into the study because she wanted treatment options for her kids in case they also had side effects when taking statins and needed an alternative. She didn’t care about the small compensation for gas. And she taught me more during that screening period than I could have ever expected during my onboarding training.

1. Drug Channels Institute (Adam Fein). 2025 Gross-to-Net Realities at Eight Top Drugmakers: The Net Pricing Drug Channel Emerges. July 21, 2026.

2. Mulcahy AW, Schwam D, Lovejoy SL. International Prescription Drug Price Comparisons: Estimates Using 2022 Data. RAND Corporation, RR-A788-3. February 2024.

3. Healthcare Dive. FTC slams pharmacy benefit managers in first report from ongoing investigation (Federal Trade Commission interim staff report, July 9, 2024).

4. Mintz. FTC Reaches Second Insulin Pricing Settlement: Comparing the Caremark and ESI Orders. July 17, 2026.

5. AJMC. PBM Reforms Signed Into Law, Reshaping Medicare Part D Drug Pricing Transparency. February 3, 2026.

6. Sidley Austin. Congress Passes Significant Federal Pharmacy Benefit Manager Reform Impacting Pharmaceutical Market Access. February 18, 2026.

7. DiMasi JA, Grabowski HG, Hansen RW. Innovation in the pharmaceutical industry: New estimates of R&D costs. J Health Econ. 2016;47:20-33. Summary: Tufts CSDD cost study backgrounder.

8. Wouters OJ, McKee M, Luyten J. Estimated Research and Development Investment Needed to Bring a New Medicine to Market, 2009-2018. JAMA. 2020;323(9):844-853.

9. Sertkaya A, et al. Costs of Drug Development and Research and Development Intensity in the US, 2000-2018. JAMA Netw Open. 2024.

10. Congressional Budget Office. Research and Development in the Pharmaceutical Industry. April 2021.

11. Medicare.gov. Costs for Medicare drug coverage.

12. Medicare.gov. Insulin coverage.

13. CMS. Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year 2026. Fact sheet, August 15, 2024.

14. Medicare.gov. Using your drug coverage.

15. HHS Office of Inspector General. Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs. OEI-05-12-00540. September 2014.

16. Epstein Becker Green, Health Law Advisor. New Federal Laws Banning "Gag Clauses" in the Pharmacy (Patient Right to Know Drug Prices Act and Know the Lowest Price Act, signed October 10, 2018). October 19, 2018.

17. FDA. Questions and Answers on Dietary Supplements.

18. Root to Rx. Plain Talk 029: Are Generic Drugs as Good as Brand Name?

Try it yourself: Got Skepticism? runs any claim through the questions in the Skeptic's Toolkit, including the one from this issue: compared to what? The Skeptic Type quiz sorts you into your pattern in about two minutes. Both play in your browser at Open Label Media.

Work in clinical research, or want to? The Open Site File comes out every Tuesday. Get it by email:

Between issues, the free tools live on the site. The Field Guide has printable patient logs and the full Skeptic's Toolkit. If you or someone you love is looking for a trial, there's a walkthrough for finding one near you. The tees and mugs that help support the work are in the shop.

For educational purposes only. Nothing in this newsletter is medical advice. Talk to your doctor or pharmacist before making any health decision, and don't stop a medicine on your own.

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Disclosure: Root to Rx is published independently by Open Label Media LLC. Views expressed are personal views of Justin Yamashita and do not represent his employer or any affiliated organization. No employer resources or proprietary information are used. Every claim is sourced from publicly available materials.

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