Money Matters: Your prescription costs didn’t rise because the pills got fancier.
They rose because the system between you and the pills got busier.

If you’ve ever stood at a pharmacy counter thinking, “Did this cost half as much last month?” - you’re not imagining things.
Many families are paying more even when nothing about their health, dosage, or insurance plan changed.

The quiet player here is something called a pharmacy benefit manager, or PBM.
They don’t make medicine.
They don’t dispense medicine.
But they have a big say in what you pay for medicine.

PBMs were originally supposed to simplify drug pricing.
Instead, they’ve turned it into a maze with fees, rebates, and rules that mostly make sense to… the people charging them.

Today’s issue is about clearing that maze.
No pitchforks. No panic.
Just enough understanding to keep more money in your family budget and fewer surprises at the register.

Let’s get into it.

Survey says: 

• About 8 in 10 insured Americans say prescription prices feel unpredictable.

• PBMs now control roughly 80% of prescription drug claims in the U.S.

• Nearly 30% of patients report abandoning a prescription due to cost.

• Generic drugs make up 90% of prescriptions but only about 20% of drug spending.

Inside Today’s Issue:

💊What pharmacy benefit managers actually do (in plain English)
💰How PBMs raise costs without raising sticker prices
👤Why insurance doesn’t always mean lower pharmacy bills
💲Simple steps to lower prescription costs this month
🤷‍♀️ What’s up for next week

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Worth Your Time

Our favorite resources

💵Savings

Cost Plus Drugs
Mark Cuban–backed pharmacy that sells many generic medications at near-wholesale prices, skipping traditional pharmacy benefit managers entirely - often revealing what drugs actually cost.

👀ICYMI

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If debt conversations make you break out in hives, this one walks through what to say, when to say it, and how to save real money without awkward phone calls or heroics.

📜Quote

“The problem with healthcare costs is that everyone involved is making money except the patient.”
- Chris Rock

Today’s Main Event

Meet the Middlemen in Your Medicine 

Pharmacy benefit managers are the reason your prescription price feels like it was calculated by a squirrel hopped up on Sugar Pops.

Let’s pull back the curtain on this fluffy-tailed critter known as the PBM.

What PBMs Actually Do

PBMs sit between:

• Drug manufacturers

• Health insurance companies

• Pharmacies

• You

Their job is to manage prescription drug benefits on behalf of insurers and employers.

In theory, PBMs are supposed to:

• Negotiate lower drug prices

• Decide which drugs are “preferred”

• Process pharmacy claims

• Save everyone money

In practice, they also:

• Decide which drugs your plan covers

• Decide which pharmacies you can use

• Decide how much you pay at the counter

• Collect fees and rebates along the way

They’re referees who also sell the scoreboard.

How PBMs Raise Costs Without Obvious Price Hikes

PBMs don’t usually raise prices by slapping on a bigger sticker.
They raise costs through structure.

Here are the big ones.

1. Rebate Games

PBMs negotiate rebates from drug manufacturers.
The higher the list price, the bigger the rebate.

That creates a weird incentive:

• Expensive drug with a big rebate = preferred placement

• Cheaper drug with no rebate = pushed aside

You pay based on the list price, not the rebate.
The rebate often goes to the PBM or insurer later.

2. Formularies That Change Quietly

A formulary is your plan’s approved drug list.
PBMs control it.

Drugs can move tiers or disappear mid-year.
Your medication didn’t change.
Your out-of-pocket cost did.

3. Pharmacy Steering

PBMs often own mail-order pharmacies or preferred networks.

They can:

• Charge more at “non-preferred” pharmacies

• Limit coverage to certain locations

• Push 90-day fills through their own channels

Convenient for them.
Not always cheaper for you.

4. Spread Pricing

In some cases, PBMs charge insurers more than they pay pharmacies - and keep the difference.

The spread isn’t obvious on your receipt.
But it shows up in premiums and copays.

Why Insurance Doesn’t Always Protect You

Insurance helps with catastrophic costs.
It’s less reliable for everyday prescriptions.

Reasons families still pay more:

• High deductibles that apply to drugs

• Coinsurance tied to list prices

• Tiered copays that shift suddenly

• Preferred drugs that don’t work for you

The system is optimized for averages.
Families live in specifics.

Where Families Actually Have Leverage

This is the part people miss.
You’re not powerless - but the leverage is uneven.

You have the most control:

• At the pharmacy counter

• Before refills renew

• When choosing where to fill

• When asking for alternatives

You have less control:

• Over list prices

• Over rebates

• Over formulary politics

So we focus where effort pays off.

The Calm Takeaway

PBMs didn’t set out to confuse families.
But complexity became profitable.

Your goal isn’t to master the system.
It’s to interrupt it just enough to lower your costs.

One Small Set of Moves That Actually Helps

You don’t need a binder or a spreadsheet.
You need a short checklist.

1. Ask the pharmacy for the cash price every time.
   Sometimes it’s cheaper than your insurance copay.

2. Compare at least one discount program.
   Tools like GoodRx, Cost Plus Drugs, or SingleCare can bypass PBM pricing.

3. Ask your doctor about therapeutic alternatives.
   Different drug, same outcome, lower tier.

4. Check independent pharmacies - not just chains.
   They often have more flexible pricing.

5. Review your formulary once a year.
   Especially before open enrollment.

These steps matter because they target the exact points where PBM pricing leaks into your household budget.

Until Next Time

What’s Up Next Week

This week, we pulled back the curtain on prescription pricing—without making it scary or complicated.
PBMs aren’t the whole problem, but understanding them gives families back some control.

Next week, we’ll look at more ways to make your budget work in your favor - while keeping acorn-stealing rodents out of your pockets.

If this issue helped, consider sharing it with someone who’s ever stared at a pharmacy receipt in silence.
Or hit reply and tell us which prescription cost surprised you most—we read every note.

See you next week.

Jim & the MoneyHoot Team 🦉

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.