The Great Repricing: How Self-Pay Cash Fits in Commercialization Strategies

Reframing the Role of Cash

In the first three articles of “The Great Repricing” series, we explored the fragmentation of the U.S. biopharmaceutical market into three payer economies — commercial, government, and self-pay — and examined the forces reshaping each.

This installment focuses on the most misunderstood of the three: self-pay, or cash.

Somehow, over the last 30 years, our industry seems to have forgotten that self-pay and cash were the payment models for biopharmaceuticals before insurance. We just added a prescription benefit plan to Medicare in 2006, and it was timed with the return to cash via Walmart’s $4 generics. According to Avalere and Boston Consulting Group, the cash market was roughly 9%-10% of all prescriptions in 2023.

Why Cash Is Re-Emerging Now

The reason that self-pay and cash are rising is that the product mix and insurance models are changing at the same time. With crowded drug classes and the prevalence of commodity products like generics, biosimilars and 505(b)(2)s, commercial insurers have increased formulary exclusions from 30 to 1,400 in the last 10 years. They have added draconian levels of utilization management with aggressive step edits. Patients who have tried to access a brand at retail know this all too well. For manufacturers that have tried to launch a brand in retail since early 2020, they find that the economy doesn’t yield what it used to and many products hit a wall, shutting down the brand and, in some cases, the company.

Cash is not some PBM disintermediation story; PBMs are disintermediating themselves. By their actions, they are not covering the drugs (think weight loss), applying utilization management (step edits are the kiss of death in retail), under-reimbursing pharmacies for brands and charging budget-breaking rates for what appears to be access. Cash is simply a natural market response.

What is still missing are four things: cash pharmacies, the patients’ awareness, empowerment of cash options and for brands to enter the game.

Insurance Is Not Working for General Medicine Brands

The rise of cash is best understood as a reaction to a system that is increasingly not working for brands.

Let’s say a brand is fortunate enough to gain access, but it had to agree to a step edit. Market access did its job, but that is not helping the product or patient. A step edit in retail results in losses of 75%-90% of valid prescriptions. Let me explain.

Step edits in specialty pharmacy are manageable, but they are the opposite in retail. Unlike specialty, retail doesn’t have anyone managing the process. Physicians lack the time, patients lack the clarity and pharmacists are not incentivized to move patients from a profitable generic to a negative-margin brand.

Therefore, “access,” in many cases, does not mean access. The market evidence reflects this reality. There has not been a broadly successful launch of a branded product through traditional brick-and-mortar retail pharmacy since March 2020, when Biohaven launched Nurtec.

Insurance is not expanding access for brands; it is increasingly constraining them. At some point, the industry has to ask whether it is optimizing for access or simply paying to participate in a system that no longer works. Perhaps this was inevitable. What is the value of a PBM in a general medicine space when 98% of the prescriptions are generic and a bottle of 100 pills costs $2? This is what Mark Cuban has been yelling about.

Cash as a Replacement for Patient Assistance

Cash also creates an opportunity to rethink the role of patient assistance and affordability programs.

Today, these programs often represent 5%-20% of gross-to-net concessions. Manufacturers have become fixated on delivering a $0-$35 monthly cost to the patient through copay cards, bridge programs and free drug strategies. This has introduced a fundamental flaw.

Even now, generics represent more than 90% of prescriptions in retail settings. They are usually available for $4-$10/month cash. This is at parity or better than many copays. For branded products, the industry has trained itself to give products away. Before coverage, we give the drug away, and after it’s covered, we buy it down to $0-$35. We think so little of our products that we have to give them away. It is not the main reason, but it is a contributing factor as to why payers don’t think they need to cover new drugs.

Adding insult to injury, when products are consistently offered for free, patients do not perceive them as valuable. We have trained the market to distrust our own pricing.

A well-designed cash strategy offers an alternative. By pricing products transparently at an affordable — but not free — level, manufacturers can reinforce value, simplify access and reduce reliance on complex assistance programs. Cash becomes not just an affordability mechanism, but a value-setting mechanism.

And if structured correctly, these prices do not affect the government or commercial pricing.

Retail vs. Specialty: Where Cash Works Best

To understand where cash can scale, it is helpful to segment the pharmacy market into retail and specialty.

In retail, the case for cash is already clear. General medicine products, particularly those facing loss of exclusivity, are increasingly difficult to support within the insurance model. When price points are low and friction is high, cash becomes the most efficient path to access.

By the end of 2025, generics represented roughly 92% of all retail prescriptions. That figure is expected to approach 98% by 2027. In a market where products are often available for pennies per dose, the role of intermediaries becomes increasingly difficult to justify.

Specialty is more complex and is beginning to fragment.

As specialty generics and biosimilars enter the market, supply is increasing. In categories where 10-12 biosimilars are available, PBMs will typically cover only a small subset based on contracting strategies.

Those not covered must find another path. Increasingly, that path is noninsurance channels, including cash-pay and direct-to-patient models. Formulary access is no longer the only path to market. In some cases, it is simply one of several competing distribution strategies. As supply expands and coverage narrows, cash becomes the natural clearing mechanism.

The Organizational Gap: Biopharma Is Structurally Unprepared for Cash

If cash is to become a meaningful channel, the challenge is not just strategic, it is organizational.

The biopharmaceutical industry is structurally unprepared to operate in a cash-based market.

Over the past 40 years, manufacturers and, arguably, the whole ecosystem have built their commercial models around insurance. Entire organizations were optimized for that system:

• Market access negotiates with PBMs.
• Gross-to-net and government pricing manage rebate exposure.
• Patient services administers affordability programs.
• Sales organizations drive formulary-aligned demand.

There is no equivalent structure for cash within our organizations. It’s usually someone’s part-time job.

In most organizations today, there is no executive accountable for a cash channel. It’s an experiment.

As a result, when manufacturers explore cash strategies, the work becomes fragmented across functions. Cash is not failing because the model doesn’t work. It is struggling because the organization isn’t built to support it. Adopting cash requires a shift from insurance-centric thinking to channel-oriented strategy, with new capabilities in pricing, distribution, compliance and patient engagement.

The risk is not moving too quickly. It is moving too slowly while the market evolves around you.

The Operational Reality

For cash to scale, two conditions must be met.

First, manufacturers must ensure clear separation between cash and insured transactions. Mixing the two introduces significant compliance risk, particularly under best price and related government pricing rules.

Second, pricing must be managed within usual and customary frameworks. If a lower cash price becomes broadly available, it can inadvertently reset reimbursement benchmarks in government programs.

These are not edge cases; they are the gating factors to scale.

They require deliberate channel design, disciplined execution and, often, new distribution models. Cash is not just a pricing decision. It is an operating model.

The Patient Behavior Shift

For the self-pay model to fully scale, patient behavior must evolve.

Today, most patients evaluate prescriptions transactionally rather than cumulatively. They do not consider total drug spending against their deductible. For cash to work at scale, patients must begin to think differently: What will I spend this year before insurance meaningfully contributes?
When is cash the better option? Cash does not fully scale until patients start thinking like payers.

Looking Ahead

In the next installment of “The Great Repricing,” we will examine the manufacturer’s balancing act—how to segment products across commercial, government and cash channels while managing pricing, access and margins simultaneously.

The central theme of “The Great Repricing” series is that the U.S. biopharmaceutical market is no longer governed by a single pricing system. Instead, three payer economies — commercial, government and self-pay — are emerging with different incentives, regulatory structures and access pathways. The manufacturers that succeed in the coming decade will be those that learn to navigate all three simultaneously.