This week, I’m rerunning some popular posts during the pre-holiday week. Click here to see the original post and comments from August 2017. We’ll have an updated and expanded version of this analysis in the 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, which will be released on February 27, 2018.
ICYMI: The Pharmaceutical Research and Manufacturers of America (PhRMA) just released its own Follow The Dollar white paper, which is also worth reading.
Yesterday, The Wall Street Journal published an intriguing article by Jonathan Rockoff titled Behind the Push to Keep Higher-Priced EpiPen in Consumers’ Hands.
The article includes a graphic attributed to me (cited as Pembroke Consulting). It shows that the drug channel—pharmacy benefit managers (PBMs), wholesalers, and pharmacies—receive more than $37 in gross profit for a brand-name drug with a $300 list price. PBMs capture about half of this amount.
The WSJ article doesn’t describe how I arrived at the figures. But now you, Drug Channels reader, will get the inside scoop.
Below, I go inside the box and trace these crucial computations. They determine the revenues and profits of the drug channel participants that operate between a brand-name drug maker and the patient. I also reveal how the figures affect the net prescription cost for a third-party payer.
As with many things, you'll have to observe the system to figure out the superposition.
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