$649.99 is the full retail price of the phone at Verizon and Apple. If you want to get it subsidized under contract, then you can get it for $199 at Verizon or Apple. However, that locks you in to a 2 year contract with monthly fees that are higher than if you paid full price. In the end, you are paying that full cost for the phone.
For example, If you buy it for $199, you will get a $30 upgrade fee, and need to pay $40/month for service (+ data and for the sake of example, we will say 10 GB of data at $80/month). After 24 months, the total cost paid is $3109.
Now if you buy the full retail price of 650, you do not pay upgrade fee, and your monthly service cost is $15/month with the same 10 GB of data for $80/month. After 24 months, the total cost paid is $2930!
So as you can see, it is actually cheaper to buy it full price or under Edge than to get the subsidized phone for $199.
Always look at total cost of ownership, that is the money you actually pay out.