Protecting Pharmacy Liens in High-Low Agreements

Amar Lunagaria — Co-Founder & Chief Pharmacist, LienScripts | March 26, 2026 | 8 min read

High-low agreements establish guaranteed minimum and maximum recovery boundaries before trial or arbitration. Pharmacy lien holders need to understand how these agreements affect lien recovery, and PI attorneys must account for pharmacy liens when setting the low-end floor to avoid post-trial distribution problems.

Protecting Pharmacy Liens in High-Low Agreements

A high-low agreement establishes a guaranteed recovery floor and ceiling before the verdict is rendered — the plaintiff receives at least the "low" amount regardless of a defense verdict, and no more than the "high" amount regardless of the jury award. This risk-management tool creates specific implications for pharmacy lien recovery: if the "low" floor is set without accounting for pharmacy lien obligations, the guaranteed minimum may be insufficient to satisfy liens after attorney fees and costs, creating a distribution crisis that harms both the client and the lien holder.

• High-low agreements must account for pharmacy lien obligations when setting the guaranteed minimum floor — otherwise a defense verdict triggers a distribution shortfall
• LienScripts generates a MERIT (Medication Evaluation & Rationale for Injury Treatment) report for every case, providing pharmacist-signed documentation for demand packages that supports the pharmacy lien balance in any recovery scenario
• As Amar Lunagaria, PharmD, LienScripts' Chief Pharmacist explains, early notification of high-low agreement terms allows LienScripts to provide lien balance confirmation and discuss resolution options before trial
• The "high" ceiling scenario requires no special pharmacy lien planning — sufficient funds exist to satisfy all obligations
• The "low" floor scenario is where pharmacy lien protection planning is critical and where most attorneys fail to prepare

How High-Low Agreements Work

A high-low agreement is a confidential side agreement between plaintiff and defendant. The terms are simple:

• If the verdict is below the "low" amount (including a defense verdict), the defendant pays the "low" amount
• If the verdict is above the "high" amount, the defendant pays the "high" amount
• If the verdict falls between the "low" and "high," the defendant pays the verdict amount

The agreement guarantees the plaintiff a minimum recovery while capping the defendant's maximum exposure. Both parties gain certainty and reduce risk.

[!KEY] The pharmacy lien risk in a high-low agreement is concentrated entirely in the "low" floor scenario. If the case resolves at the guaranteed minimum, attorney fees, costs, medical liens, and pharmacy liens all must be satisfied from a fixed and potentially constrained pool. Setting the "low" floor without calculating total lien obligations is the most common mistake attorneys make.

Calculating the Low-End Floor

Before agreeing to a "low" floor, calculate the minimum distribution:

Step 1: Determine attorney fees on the "low" amount (contingency percentage)

Step 2: Calculate litigation costs to be reimbursed

Step 3: Total all medical liens (doctors, imaging, surgery, hospitals)

Step 4: Total all pharmacy liens — request a current balance from LienScripts

Step 5: Calculate Medicare/Medicaid obligations if applicable

Step 6: Subtract all obligations from the "low" amount

If the remainder is zero or negative, the "low" floor is too low. The client receives nothing after satisfying obligations, which creates both an ethical problem and a practical one — lien holders may not agree to accept less than their full balance without a negotiated reduction.

Example Calculation

• Low-end floor: $75,000
• Attorney fees (33%): $24,750
• Costs: $8,000
• Medical liens: $25,000
• Pharmacy lien: $12,000
• Remaining for client: $5,250

This is a workable distribution. But if the medical liens were $30,000 and the pharmacy lien $15,000, the client would receive $0 — an unacceptable outcome that should be identified and resolved before agreeing to the high-low terms.

[!TIP] Before finalizing any high-low agreement, run the distribution calculation for the "low" floor scenario. If the client's net recovery is inadequate, either increase the floor, negotiate lien reductions in advance, or structure the agreement to address the distribution explicitly.

Pre-Agreement Lien Resolution Strategies

Strategy 1: Negotiate Lien Reductions Before Setting the Floor

Contact all lien holders — including LienScripts — before finalizing the high-low terms. Present the proposed agreement and ask whether lien reduction is available if the case resolves at the floor.

LienScripts evaluates reduction requests based on the specific case circumstances, including the total settlement, injury severity, and clinical documentation. Knowing the high-low terms in advance allows LienScripts to provide a conditional reduction commitment: "If the case resolves at the low, LienScripts will accept $X."

Strategy 2: Build Lien Obligations Into the Floor

Set the "low" floor at a level that ensures all lien obligations can be satisfied with a reasonable net recovery for the client. This may require negotiating a higher floor with the defense — which is achievable when the attorney can demonstrate that the floor must cover documented medical and pharmacy obligations.

Strategy 3: Tiered Lien Resolution

Negotiate a tiered arrangement where lien reduction percentages vary based on where the verdict falls within the high-low range:

• At the "low" floor: LienScripts accepts a negotiated reduced amount
• Between "low" and "high": LienScripts accepts the full balance
• At the "high" ceiling: LienScripts accepts the full balance

This structure aligns lien holder recovery with the overall case outcome.

Protecting the High-End Scenario

When the verdict exceeds the "high" ceiling, the client's recovery is capped. This scenario does not typically create pharmacy lien problems — the capped amount is usually sufficient to cover all obligations. However, attorneys should confirm that:

1. The "high" ceiling covers attorney fees, costs, all medical liens, all pharmacy liens, and a meaningful client recovery
2. The pharmacy lien is satisfied in full from the capped amount — there is no basis for requesting lien reduction when the verdict exceeds the cap

Communication with LienScripts

Before the agreement: Notify LienScripts that a high-low agreement is under consideration. Request a current lien balance and discuss potential lien reduction scenarios for the floor amount.

After the agreement: Confirm the high-low terms with LienScripts so the lien balance and any conditional reduction commitments are documented.

After verdict: Notify LienScripts of the verdict amount and the applicable high-low payment, and proceed with lien satisfaction from the settlement distribution.

[!KEY] The strongest protection for pharmacy liens in high-low agreements is early communication. Attorneys who notify LienScripts before finalizing the agreement can incorporate lien resolution into the agreement structure, avoiding post-verdict distribution problems that create disputes and delay client recovery.

Ethical Considerations

The attorney owes fiduciary duties to the client and must account for all lien obligations in settlement planning. Agreeing to a high-low floor that is insufficient to satisfy liens without the client's informed consent creates ethical exposure.

Best practice: Before finalizing the high-low agreement, provide the client with a written distribution analysis for both the "low" floor and "high" ceiling scenarios, showing all obligations and the client's projected net recovery in each scenario.

Frequently Asked Questions

Contact LienScripts to discuss pharmacy lien resolution in high-low agreement cases.

Related Resources

• Settlement Allocation of Pharmacy Costs
• How to Negotiate Pharmacy Liens
• What Happens to a Pharmacy Lien at Settlement?
• Pharmacy Lien Mediation Strategies