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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