Mar 11, 2019

Everyone's making money off of drugs

As various members of the drug supply chain blame one another for rising prescription drug costs, they're all making a lot of money off of said drugs.

Data: The Pew Charitable Trusts; Chart: Lazaro Gamio/Axios
Data: The Pew Charitable Trusts; Chart: Lazaro Gamio/Axios

The state of play: Between 2012 and 2016, net spending on drugs sold in pharmacies rose from $250.7 billion to $341 billion, according to a new Pew analysis.

  • Pharmacy revenue more than doubled, and the profits of pharmacy benefit managers and drug manufacturers also increased.

While it's true that patients' discounts increased, that didn't stunt the growth in what people pay for drugs, mostly via premiums.

  • PBMs passed a greater share of their rebates on to their customers, but growth in the size of the overall pie meant that their profits held steady all the while. And other revenue streams skyrocketed at the same time.
  • Meanwhile, manufacturers significantly increased the value of patient discounts, but net sales still increased.

The bottom line: All of these profit increases are eventually borne by all of us through premiums, taxes and out-of-pocket costs.

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