How Do Pharmacy Wholesalers Make Money?
Pharma retailers actually make money by charging manufacturers a percentage of their wholesale acquisition costs (WAC) or list price of their product for distribution services. Aggregated data on prices, orders and inventory across all trade and product classes. Additionally, the net profit margin of pharmacy benefit managers (PBMs) is misleading because they list the cost of drugs as expenses, even though they never really handle drugs. The drug supply chain involves a range of stakeholders, from the manufacturers who make drugs, to the pharmacies that distribute them, to the PBMs that oversee the process.
Manufacturers produce medicines and sell them in bulk to wholesalers who in turn sell drugs to pharmacies. In this process, wholesalers use complex logistics and packaging methods to receive and deliver medicines on time and in good condition. PBMs, manufacturers and insurers are developing lists of drugs (so-called recipes) to be covered by insurers. PBMs can give a particular manufacturer’s drug a preferred placement in their formula to receive discounts and other incentive payments.
Insurers cover their patients with prescription drugs and pass on some of the savings PBM negotiated for them. Money can be moved from one party to another to be sent back to the first party only (e.g.. B. when pharmacies pass copays to PBMs that return payments to pharmacies). Patients never pay directly to the manufacturers who develop their drugs or the pharmacies that sell them. Insurance coverage can ultimately be determined by the manufacturer’s paid incentives for PBMs and not patient preferences or even drug efficacy.
When the upcoming Etna acquisition is complete, CVS will be present at all levels of the supply chain, except wholesale. Similarly, Cigna’s ongoing acquisition of Express Scripts, approved by the Department of Justice earlier this week, would provide a PBM and specialty pharmacy to supplement its existing pharmacy business. UnitedHealthcare’s supply chain subsidiaries include Optum (a PBM) and BrioVarX (a specialty pharmacy). Several other companies want to take a bite of the PBM profits.
These companies negotiate on behalf of their customers or simply on behalf of the public and have grown in importance. These companies could potentially reduce the role of PBMs and negotiate discounts for manufacturers who sell directly to pharmacies or patients. In doing so, these companies essentially bypass the entire supply chain. Patients no longer need to visit a doctor, payer, PBM, wholesaler, and pharmacy to get these generics, but can use a single app to get and fill out a subscription.
The pharmaceutical supply chain is extremely complicated in its current form. Supply chain intermediaries Wholesalers, PBMs, pharmacies and payers all benefit from a combination of scale and opacity. Consumers typically pay the most through the supply chain, as pharmacies also need to benefit from medicines. Healthcare companies can also benefit from only having to contact and order a single wholesaler to get a full range of pharmaceutical and medical supplies.
Without a license, a pharmaceutical wholesaler can be linked to serious crime, including counterfeit prescriptions and unauthorized drug distribution. Wholesalers can also buy and offer medical care related products such as gauze, syringes, and surgical gloves. Whether you’re an independent pharmacy or part of a pharmacy chain, wholesale pharmacy is a sensible way to increase sales and save money. While some may argue that wholesale suppliers are no longer needed, wholesale pharmaceutical products provide customers and customers with savings.
This blog does not provide medical advice. It is intended for informational purposes only. Do not use it as a
substitute for professional medical advice, diagnosis, treatment, or disease prevention. Always seek the
advice of your physician or qualified healthcare providers for any questions you have regarding a medical
condition.
The views and opinions expressed on this blog are solely those of the original authors and other
contributors. These views and opinions do not necessarily represent those of Gabriel Nieves, LAC
Healthcare Solutions, LAC.us Staff, and/or any/all contributors to this blog/site.
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