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You move to a new town and walk into the local barbershop to get a haircut.  You sit down to get the same trim you’ve had for years, but when you go to pay the barber, he says, “That will be $700.” You respond, “Are you kidding me? I’m not paying that!”  The barber says, “Why not? That’s the price, and I delivered the service.” To which you respond,“Where does it say that I have to pay $700? I would never agree to pay that for a haircut.”  The barber replies, “Nowhere. That’s just my price.  But since you’re new to town, I’ll give you a 60 percent discount.”

Read: Reference-based pricing: where do carriers go from here?

You would never tolerate that kind of business from your barber or hairdresser, but this is an everyday reality within the health care system. As a broker, you are confronted with this reality when selecting health care plans for your clients.  Hospital and physician PPO networks, labs, MRI and CT Scans, among other things, are all subject to the “black box” of health care pricing,  the great mystery of health care.  Nowhere in the vast, murky world of health care does this factor more than in pharmacy.  In fact, pharmacy is the most utilized (average of 11 Rx’s per active member per year; 50+ Rx’s per retiree per year), the least understood, and yet the most complex of all health care benefits.  Consider this: Pharmacy experts predict two major dynamics will occur over the next two years:

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