Provider Cost Awareness: Do Clinicians Know Drug Prices?

Doctors prescribe medications every day. But how often do they actually know what those drugs cost?

It’s not a trick question. The answer, based on decades of research, is: not nearly enough. A 2007 review of 29 studies found physicians consistently misestimated drug prices-overestimating cheap generics by 31% and underestimating expensive brand-name drugs by 74%. That’s not a small mistake. It’s a systemic blind spot with real consequences for patients.

Why Does This Matter?

Prescription drug spending in the U.S. hit $621 billion in 2022. That’s nearly 10% of the entire healthcare budget. And 28% of adults skip doses or skip refills because they can’t afford their meds. Meanwhile, 82% of patients say drug prices are unreasonable. Yet most clinicians aren’t equipped to make cost-informed choices.

Imagine this: A 68-year-old with diabetes needs a new oral medication. The doctor picks a brand-name drug because it’s familiar. But a generic alternative exists-same efficacy, same safety, and 90% cheaper. If the doctor doesn’t know the price difference, the patient gets stuck with a $300 monthly copay instead of $30. That’s not just a financial burden. It’s a health risk.

The Numbers Don’t Lie

A 2016 study of 254 medical students and doctors revealed shocking gaps:

• Only 5.4% of generic drug prices were estimated within 25% of the actual cost.
• Just 13.7% of brand-name drug prices were accurately estimated.
• Doctors overestimated generic costs 77.5% of the time.
• They underestimated brand-name drug prices 51.4% of the time.
• Only 30% of dispensing costs were correctly recalled.

Even more troubling? Most clinicians thought they were doing fine. The gap between perceived knowledge and reality is wide. And it’s not just new doctors. Even experienced physicians struggle. One study showed that while doctors scored slightly better than students on cost awareness scales (17.81 vs. 15.56 on a 24-point scale), both groups still failed basic pricing tests.

What’s Causing the Gap?

It’s not laziness. It’s not ignorance. It’s structure.

Medical school teaches pharmacology-mechanisms of action, side effects, drug interactions. But almost none teach pricing. A 2021 study found that 56% of U.S. medical schools have no formal curriculum on drug pricing. Students graduate without knowing how a drug’s price is set, why two identical pills cost $15 at one pharmacy and $320 at another, or how insurance formularies work.

And once in practice? The system doesn’t help. Clinicians are overwhelmed. A 2023 Reddit thread from primary care physicians revealed that checking a single drug’s cost can take 3 to 5 minutes. That’s 30+ extra minutes per day just to avoid prescribing something a patient can’t afford. Most don’t have that time.

Even when cost tools exist, they’re unreliable. One resident wrote: “Our Epic system shows insurer-specific pricing, but not patient-specific copays. So the alert says ‘$50,’ but the patient’s copay is $180 because of their deductible.” That’s worse than no info at all-it’s misleading.

Technology Can Help-If It’s Done Right

The biggest breakthrough in recent years? Real-time cost alerts inside electronic health records (EHRs).

A 2021 JAMA Network Open study found that when physicians had access to out-of-pocket cost estimates during prescribing, their accuracy improved dramatically. But it’s not just about showing numbers. It’s about context.

At UCHealth, a system was built that didn’t just show prices. It flagged alternatives and estimated potential savings. The result? One in eight doctors changed their prescription. That number jumped to one in six when potential savings exceeded $20.

That’s powerful. But here’s the catch: only 37% of U.S. health systems have implemented these tools as of late 2024. And even among those that do, adoption varies. Doctors under 40 are 50% more likely to use them than those over 55. Why? Familiarity with tech. But also, younger clinicians are more likely to have been exposed to cost-awareness training during their education.

And it’s not just about saving money. It’s about equity. Early data from a 2024 study presented at AcademyHealth showed that in safety-net clinics serving low-income patients, cost alerts led to 22% more prescription changes than in private practices. That’s not just efficiency-it’s justice.

What About Value, Not Just Price?

Some experts argue that clinicians shouldn’t focus on price at all-they should focus on value. “Is this drug giving the patient meaningful benefit?” they ask. “If a $500 drug extends life by two months, is that worth it?”

That’s a valid perspective. But here’s the problem: most drugs aren’t being chosen for their life-extending power. They’re being chosen because they’re familiar, or because a rep stopped by, or because the patient asked for it. And many of those drugs have equally effective, far cheaper alternatives.

The 2022 Inflation Reduction Act changed the game. For the first time, Medicare can negotiate prices for top-selling drugs. Drugs like Humira saw price hikes of 4.7% in 2023-without new clinical benefits. That’s not value. That’s profit.

Cost awareness isn’t about being cheap. It’s about being smart. It’s about knowing that a $30 generic can do the same job as a $300 brand, and that choosing the cheaper option isn’t compromising care-it’s improving access.

What’s Changing?

Change is slow, but it’s happening.

Medical schools are starting to add pricing modules. The American Medical Association and American College of Physicians have both made cost-conscious prescribing a formal priority since 2015. The CMS now requires drug manufacturers to report out-of-pocket cost estimates. And more health systems are investing in EHR-integrated tools.

At Mayo Clinic, their Drug Cost Resource Guide-updated quarterly-has a 4.7/5 rating from over 1,200 physicians. Compare that to the generic Medicare Part D formulary, which scores a 2.8/5. The difference? Usability. Clarity. Relevance.

But the biggest driver of change isn’t policy or technology. It’s patients. When someone says, “I can’t afford this,” and the doctor has no answer, it changes everything. That moment-when a patient’s financial reality hits the clinical encounter-is what’s pushing the profession forward.

What Can Be Done?

Here’s what works:

1. Integrate real-time cost data into EHRs-not just list prices, but show alternatives and estimated savings.
2. Teach drug pricing in medical school-include how prices are set, how insurance works, and how to find affordable options.
3. Make tools easy to use-if it takes more than 10 seconds to get an answer, clinicians won’t use it.
4. Focus on value, not just cost-train clinicians to ask: “Is this the best option for this patient, considering their budget, adherence risk, and clinical needs?”
5. Support safety-net clinics-they serve the most vulnerable. Cost tools there have the biggest impact.

There’s no magic bullet. But the evidence is clear: when clinicians know the cost, they prescribe better. And when they prescribe better, patients take their meds. And when patients take their meds, hospitalizations drop. Costs go down. Lives improve.

This isn’t about cutting corners. It’s about cutting waste-and making sure every prescription is both effective and affordable.

What’s Next?

By 2027, 75% of U.S. health systems are expected to have advanced real-time benefit tools. That’s progress. But it won’t matter unless clinicians are trained to use them-and patients are empowered to ask, “Is there a cheaper option?”

Until then, the gap remains. And patients keep paying the price.