Health Affairs July 31, 2018
President Donald Trump’s May 11 speech on lowering prescription drug prices, as well as many statements from the pharmaceutical industry, have stressed that supply chain intermediaries, or “middlemen,” are capturing much of the money that is often categorized as drug spending. A number of studies have attempted to quantify this by focusing on the gap between the list and net price. However, these analyses focus primarily on manufacturers’ rebates and do not account for revenues retained from other transaction costs and mark-ups. A clearer understanding of the total market size, as well as the revenues retained from the purchase, distribution, and payment of prescription drugs throughout the US supply chain, may be useful for policy makers as they seek reforms...
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