With a credit card, a large percentage of the revenue for the card issuer comes from "interchange" fees that are charged as a percentage of all money used for purchases to the merchant that accepts the card. Most consumers aren't even aware that the fee exists as it has no direct impact on them (though one would think given the percentage of purchases that are made using CCs that interchange fees are now baked into merchants' prices). Generally, the interchange rate is used to finance the award programs of the credit cards. As a result the cards with the best awards programs are also usually the cards with the highest interchange fee rate. The situation gives merchants and consumers interests that are directly opposed to each other: consumers want to use cards with the highest interchange rates (though not directly so) and merchants want consumers to use cards with the lowest possible interchange rates. Due to contracts put in place by the credit card companies, generally merchants aren't able to pass interchange costs on to consumers or to even influence their behavior by making one card more attractive (financially) to use than another. As a result, consumers use the cards with the best programs they can get their hands.
Similarly, in the recent past consumers of pharmaceuticals have traditionally also been isolated from the price of the products that they purchased -- assuming they have insurance. As such, insured consumers didn't need to worry about the price of the drugs they were purchasing and thus selected drugs solely upon greatest perceived benefit (e.g. purchasing expensive brand name drugs over generics). Things have changed though as health-care providers have started imposing a tiered structure that charges consumers co-pays based upon a tiering structure so as to shape consumer behavior. A USAToday quote illustrates: "The average co-payment now in private insurance is $10 for generics, $22 for brand-name drugs on an insurer's formulary and $35 for those not on the formulary, according to the Kaiser survey. The average co-payment for a fourth-tier drug is $74."
But, there are definitely parallels between the purchasing structures that have been created or developed in these two industries. That is, the following are both similar:
Pharma -> health care insurer -> consumer
&
Payment company (CC) -> merchant -> consumer.
The big difference being that health care providers have successfully developed a way of passing costs on to consumers, whereas strong contracts have made it impossible for merchants to pass on their up-stream Credit Card costs to consumers. The end result is that consumers of drugs are becoming far more price conscious and are favoring cheaper generics over branded drugs - resulting in a state where more than 40% of prescribed drugs are now generic. Whereas, American Express and elite Master Card and Visa products reign supreme for mid to high end product/service purchasing with consumers.
The following from an USA today Article sums things up nicely:
While most working-age adults have insurance with two or three different "tiers" corresponding to how much they pay at the pharmacy for certain drugs — with generics the cheapest and brand-name drugs more — about 40% of the Medicare plans have four tiers, according to the analysis by Avalere Health, a for-profit research firm in Washington that did an analysis of the drugs earmarked for higher payments by patients. Fourteen percent have five tiers.
In comparison, 4% of workers with health insurance through their jobs have a fourth tier, according to a nationwide survey by the non-profit Kaiser Family Foundation.
In that fourth tier — where Medicare patients will most commonly pay 25% to 33% of the cost of the drug rather than a flat dollar amount — are such expensive treatments as Remicade and Enbrel for rheumatoid arthritis, Procrit and Aranesp for anemia and Copaxone and Betaseron for multiple sclerosis.
That differs, says Avalere President Daniel Mendelson and other benefit experts, from the drugs most commonly found in higher "tiers" in employer-offered plans. Often, those tiers are used by employers generally trying to get workers to think twice about taking expensive drugs for non-life-threatening conditions, such as hair loss, allergies or impotence.
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