A method is disclosed by which pharmacies and physicians are encouraged to select appropriate and effective medications but dissuaded from selecting higher priced medications where more economical versions are available as alternatives, but where physicians and patients can also select such higher priced medications if they so choose and are prepared to pay that higher price. Under this system a single representative price (capitation rate) is calculated by a prescription payment plan manager for a group of related medications, usually including both branded and generic, and that price is paid to a pharmacy for all prescriptions of that group of medications fulfilled under the plan. The representative prices for different groups, including their minimum levels, are periodically reviewed and updated as appropriate.