How to Speak Drugstore Cowboy

Insurer: A huge company that essentially acts as a bank for your health care costs. You pay them a subscription fee and they contribute to your health care costs in return. Some examples include UnitedHealth, BlueCrossBlueShield, Cigna, Humana, and Aetna.

PBM (Pharmacy Benefit Manager): The Mafia of the Drug World. Middlemen who claim to reduce drug costs but mostly inflate them while skimming billions off the top. Insurers hire them to create the drug formularies for their plans and process pharmacy claims. Optum, ExpressScripts, and Caremark are the three biggest PBMs and together they control ~80% of the market.

Formulary: The official list of drugs your insurance plan covers, curated not by your doctor or a team of well-intentioned medical experts but by cost-benefit analysts at the PBM.

Rebates: Pharma’s kickback system and the biggest profit source for PBMs. Drugmakers pay PBMs to favor their drug on insurance plans. The rebates are sometimes shared with the insurers but rarely (like, never) passed down to the patients.

Spread Pricing: The PBM bills your insurer one amount, pays the pharmacy another, and pockets the “spread” as profit.

DIR Fees (Direct and Indirect Remuneration): Junk fees PBMs charge pharmacies weeks or months after a prescription is filled.

Clawbacks: When the patient’s copay is more than the total drug cost, and the PBM reaches into the pharmacy’s bank account weeks later without asking and steals back the difference.

MAC Pricing (Maximum Allowable Cost): PBMs’ secret list of what they’ll reimburse pharmacies for generics. Not based on reality and not shared. Changes arbitrarily.

Tiered Copays: The higher the tier, the more you pay. Generic? Tier 1. New brand-name drug with a great lobbyist? Welcome to Tier 4.

Prior Authorization: Before you can get the drug your doctor prescribed, someone at your insurance company—who has never met you—has to give it a thumbs-up. Usually after a few faxes, a prayer, and your doctor successfully pleading your case.

Step Therapy: When Insurance tells you to try and fail on cheaper drugs first before they’ll cover the one that actually works.

Generic vs. Brand: Same active ingredient, different price tags. Generics are cheaper but equally effective (as long as they are manufactured by a reputable source).

Biosimilar: Like generics, but for complex biologic drugs.

Therapeutic Equivalent: Two drugs that deliver the same result in the body—even if they look different. Like Coke vs Pepsi.

Off-label Use: When a drug is prescribed for something the FDA didn’t explicitly approve. Common, legal, and sometimes how we find out what actually works.

Compounding: Custom-mixing medications for patients when commercial options don’t cut it. What you think of when you imagine an old-school apothecary.

Adherence: Whether patients actually take their meds. 

Polypharmacy: When someone is on five or more meds. 

Adverse Drug Reaction (ADR): Side effects, but serious.

Contraindication: A reason not to use a drug - like a health condition, or an interaction with another drug. 

Black Box Warning: The FDA’s most serious warning. Found on the label inside a literal black box. If you see one, pay attention.

Half-life: How long it takes for half of a drug to leave your body. This is why you take some meds once a day and others every six hours.

Third-Party Payer: Anyone who pays for your care who isn't you or your doctor. Usually insurance.

In-Network vs. Out-of-Network: Insurance companies negotiate discounted rates with certain providers - these are “in-network.” Everyone else is “out-of-network,” which usually means higher costs, surprise bills, or full denial of coverage.

Copay: What you owe at the cash register for prescriptions (or healthcare services) after your insurance pays their portion.

Deductible: The amount you must spend on your healthcare costs every year before your insurance starts chipping in.

Specialty Pharmacy: A term that used to mean “expert handling of complex drugs.” Now mostly means “a pharmacy owned by your insurer that they can force you to use.”

340B Program: A federal discount program meant to help hospitals and the pharmacies that serve their patients. Now often just exploited as a backdoor revenue stream.

Medicare Part D: Medicare’s prescription drug coverage.

“Cash Price”: The price of a drug without using insurance. Often lower than your copay. 

GoodRx (and other discount cards): Coupons that often beat your insurance price while still stealing money from the pharmacy you are filling with. Built on the same data-selling ecosystem they claim to fight. 

Script: Industry-speak for a prescription. 

Lifestyle Drug: A drug used to improve quality of life, not treat illness, like Viagra or Propecia.

Copay-Assistance Card (Coupon): A manufacturer-sponsored coupon card that lowers your out-of-pocket cost. Helps you, but ultimately just another front in the rebate wars.