Provider Cost Awareness: Do Clinicians Know Drug Prices?

How much does a prescription for metformin really cost? If you're a doctor, you might guess $20. The real price? $4. And that’s not an outlier. Across the U.S., clinicians consistently misjudge drug prices-overestimating cheap meds and underestimating expensive ones. This isn’t just a trivia gap. It’s a problem that affects patient care, adherence, and billions in avoidable spending.

Doctors Don’t Know What Drugs Cost

A 2007 review of 29 studies found that physicians overestimated the cost of low-price medications by 31% and underestimated high-cost drugs by 74%. That’s not a small mistake. It means a doctor might think a $5 generic is $7, and a $500 brand-name drug is $130. Neither guess helps a patient. When you don’t know the real cost, you can’t choose the best option.

Even more startling: a 2016 study of 254 medical students and doctors showed only 5.4% of generic drug costs and 13.7% of brand-name drug costs were estimated within 25% of the actual price. For dispensing fees, only 30% were correctly estimated. Most doctors couldn’t tell if a drug was covered by insurance, what the copay would be, or whether a cheaper alternative existed.

And it’s not just new doctors. One study found senior physicians were slightly better than students-but still terrible at estimating costs. The gap isn’t about experience. It’s about access. In 92% of cases surveyed in 2007, clinicians said they wanted cost information-but couldn’t find it at the point of care.

Why This Matters More Than You Think

Prescription drug spending hit $621 billion in 2022. That’s 9.2% of total U.S. healthcare costs. And 28% of adults skip doses or don’t fill prescriptions because they can’t afford them. When a doctor prescribes a $300 drug without knowing a $15 generic works just as well, they’re not just wasting money-they’re setting up a patient to fail.

One patient in Colorado stopped taking her blood pressure medication because she thought it cost $80 a month. The real price? $12. She didn’t know she could get it at Walmart for less than a coffee. That’s the kind of gap that leads to ER visits, hospitalizations, and worse outcomes.

It’s not just about affordability. It’s about trust. When patients find out their doctor prescribed something unnecessarily expensive, it breaks the relationship. They start questioning every recommendation. That’s harder to fix than a prescription.

What’s Being Done to Fix It

The solution isn’t more training. It’s better tools. Electronic health records (EHRs) are now being updated to show real-time drug costs at the moment of prescribing. A 2021 JAMA Network Open study found that when cost data popped up in the EHR, doctors made better choices. One in eight revised a prescription. That number jumped to one in six when the potential savings were over $20.

UCHealth rolled out a system called Real-Time Benefit Tools (RTBTs) in 2022. It shows patients’ exact copays based on their insurance, pharmacy, and formulary. Doctors saw a 12.5% drop in high-cost prescriptions. One internal medicine resident said it cut 30 minutes off their day-no more Googling prices or calling pharmacies.

But it’s not perfect. Many systems still show list prices, not patient-specific costs. A drug might say $150-but if the patient has a $10 copay, the alert is misleading. Some tools don’t account for mail-order discounts, pharmacy coupons, or manufacturer assistance programs. That’s why adoption is still low: only 37% of U.S. health systems use RTBTs as of late 2024.

Who’s Getting It Right

Mayo Clinic’s Drug Cost Resource Guide, updated quarterly since 2019, is one of the few tools clinicians actually use. It’s simple: a searchable list with actual cash prices, insurance copays, and alternatives. Physicians rate it 4.7 out of 5. Compare that to the generic Medicare Part D formulary, which scores 2.8.

What makes Mayo’s guide work? It’s updated regularly, easy to access, and doesn’t require logging into a portal. It’s built into their EHR as a pop-up, not a separate tab. Doctors don’t have to hunt for it.

Harvard and UCHealth are now studying whether these tools reduce disparities. Early data shows safety-net clinics-where patients are more likely to be uninsured or underinsured-see 22% higher prescription changes after cost alerts than private practices. That’s not just efficiency. That’s equity.

The Education Gap

Medical schools still don’t teach drug pricing. A 2021 study found 56% of U.S. medical schools have no formal curriculum on drug costs. Students learn pharmacology, side effects, mechanisms-but not price. They leave thinking brand-name drugs are better because they’re more expensive. That’s wrong. Only 44% of students know drug prices have little to do with R&D costs. The public believes 50% of the price goes to research. It doesn’t.

Some experts argue doctors shouldn’t focus on cost at all-just clinical value. But that ignores reality. A drug might be clinically superior, but if a patient can’t afford it, it’s useless. The American College of Physicians and the American Medical Association both say cost-conscious prescribing is part of professional duty. It’s not optional.

What’s Changing Now

The 2022 Inflation Reduction Act changed the game. For the first time, Medicare can negotiate prices for high-cost drugs like insulin and Humira. Humira’s price jumped 4.7% in 2023-without any new indications. That kind of increase is now under federal scrutiny.

CMS now requires drugmakers to report out-of-pocket costs. That data will feed into EHRs. By 2027, 75% of U.S. health systems are projected to use advanced RTBTs. That’s not speculation-it’s policy-driven.

And patients are pushing for change. Eighty percent support Medicare price negotiation, regardless of political party. That’s rare in today’s politics. It means pressure won’t fade.

What’s Still Broken

The biggest problem? Fragmentation. The same drug can cost $15 at one pharmacy and $320 at another. Insurance networks vary. Pharmacy benefit managers change prices daily. Even with EHR alerts, doctors can’t always know what a patient will pay until they’re in the pharmacy line.

And there’s resistance. Some physicians still think cost discussions are “not their job.” Others say alerts slow them down. But the data shows the opposite: when cost tools are well-designed, they speed up decisions. One study found doctors using RTBTs spent less time on prescribing overall because they didn’t have to double-check.

Adoption is higher among younger doctors-78% under 40 use cost tools regularly, compared to 52% over 55. That’s not just tech comfort. It’s cultural. Newer clinicians grew up with real-time data. They expect it.

What Needs to Happen Next

It’s not enough to show prices. We need context. An alert should say: “This drug costs $15 cash. A generic alternative exists and is covered with a $5 copay.” Not just a number. A recommendation.

Medical schools must add drug pricing to core curricula. Not as an elective. As a requirement. Students need to learn how to ask: “Is there a cheaper option that works just as well?”

Hospitals need to invest in RTBTs-not as a perk, but as a standard. The UCHealth system cost $2.3 million to build. But it saved patients $187 per year on average. That’s not a cost. That’s a return.

And regulators need to keep pushing. Transparency laws, price caps, and public reporting are working. The data is clear: when clinicians know the cost, patients get better care.