The US drug supply chain is riddled with opaque pricing that obscures the different between drug manufacturer list prices (gross prices) and net prices actually received by them. Drug makers offer rebates to PBMs which they share with plan sponsors (employers) and pocket say 5%.
For certain drugs the difference between what the list price is and what the net price received by the drug manufacturer is can exceed 50%.
Yet when customers pay at the retail pharmacy, their out-of-pocket costs are determined by the list price and the pharmacy pockets the deductible or co-pay, thank you very much based on this inflated price.
Presumably Amazon will not try to force consumers to pay a fictional price that has no economic meaning in the supply chain other than to determine the profits made by drug wholesalers, PBMs, and health plans sponsors (for them more of a reduction in cost of their benefit).
Longer-term you could see Amazon completely bypassing the current supply chain infrastructure of wholesalers, cutting out the PBMs and negotiating directly with drug manufacturers. This would eliminate the entire gross-to-net pricing system in the industry that layers costs.
This is one of the most encouraging bits of news I have heard for US consumers relating to drug pricing. Hopefully Amazon succeeds in reshaping the US drug pricing system. There are significant regulatory and marketplace hurdles to overcome, but we should all wish Amazon well.
If you doubt the significant of this news, just look at what has happened to stock prices of key players:
Retail Pharmacy: CVS -8%, WBA -9%
Distributors: CAH -7%, MCK -5%, ABC -3%
You can follow @BurntOutCase.
Tip: mention @twtextapp on a Twitter thread with the keyword “unroll” to get a link to it.

Latest Threads Unrolled:

By continuing to use the site, you are consenting to the use of cookies as explained in our Cookie Policy to improve your experience.