Dispensing Fee Mandates Increase Drug Spending; Here Is the Data

There are a lot of different transactions that happen within the prescription drug supply and payment chain. One of the most critical transactions is when the patient picks up their prescription from the pharmacy. Seems simple enough. The patient pays their portion of the drug costs at the pharmacy counter, and the pharmacist or pharmacy technician gives the patient their drugs. What’s included in that payment transaction, outside of the actual cost of the drug, is the additional compensation a pharmacy receives for preparing and dispensing a drug to a patient – a dispensing fee. Usually, dispensing fees and drug reimbursement rates are negotiated and agreed upon between pharmacies (or Pharmacy Services Administration Organizations, organizations collectively representing groups of pharmacies) and the pharmacy benefit manager (PBM), who pays the pharmacy on behalf of the plan sponsors. However, some states are considering legislation requiring PBMs to reimburse pharmacists with a mandated dispensing fee. In 2024 alone, 17 states passed such laws.

A mandated $10.50 dispensing fee in the commercial market could increase drug spending nationally by almost $16 billion annually.

Back in 2021, we estimated the cost impact a mandated $10.50 dispensing fee would have on states’ commercial insurance market prescription drug spending (for more information, see our previous blog post). This year, we re-created that study using updated data and a new data source and drew the same conclusions: Drug spending would increase dramatically if states mandated high dispensing fees. Using 2023 data from IQVIA, our 2025 study estimates that if all states adopted a $10.50 dispensing fee on every commercial prescription filled, drug spending across the country could increase by almost $16 billion in the first year alone. Paying pharmacies more will raise prescription drug costs for patients and health plan sponsors, like employers and labor unions. Reimbursement mandates do not save states money because they act as “guaranteed profits” for pharmacies, often through these high dispensing fees. Real PBM data can offer us a look at the costs of mandate implementation.

West Virginia’s 2022 dispensing fee mandate may have cost patients and employers over $100 million.

In 2022, West Virginia implemented a law that set pharmacy reimbursement at mandated levels of the National Average Drug Acquisition Cost survey plus a $10.49 dispensing fee in the commercial market. Using prescription drug data from one PBM’s experience in West Virginia and scaling that up to all commercial market prescription fills in the entire state, we estimate that the impact this law could have had on West Virginia was over $113 million in increased drug spend in just the first year. And who pays this additional cost? Patients and employers. This is just one PBM’s data in one state, but if additional states pass this type of legislation, patients and employers will shoulder the costs. 

In the US, we spend a lot of money on prescription drugs. Retail prescription drug spending accounted for 23% of commercial health spending in 2022, up from 20% in 2018. This growth in prescription drug spending can be attributed to the growth in the number of prescriptions dispensed and an increase in retail prescription drug prices. Legislation mandating a high dispensing fee on each prescription filled will only add to the problem. The burden of these increased costs will fall on patients and employers while going straight to pharmacists’ bottom line.