What is the markup on medicine?

mark up medicine

The markup on medicine:

The World Health Organization (WHO) defines a markup as the difference between the purchase price (cost price) and the sales price of a product. A markup is the sum of all additional fees and costs imposed on a product to cover production costs and make a profit. According to an analysis by Ronny Gal, a senior research analyst at Bernstein, hospitals show drug prices by an average of 250 percent. In general, medical care and pharmaceuticals account for 20 percent of gross costs, and as a result, even the slightest change in markup guidelines could have a huge financial impact.

Before switching mark-up medicine methods or executing new surcharges, hospitals should model the impact on gross fees. Hospital markup policies that set prices for medical care and medicines can vary significantly across the country, resulting in large variations in drug and delivery costs. Drug markup guidelines often differ from those for deliveries in that they are based on either the average wholesale price (AWP) or a cost-based method such as wholesale acquisition cost (WAC). As shocking as this may be, these exorbitant drug surcharges are a recognized practice in the medical industry and are considered one of the factors contributing to the high cost of medical care in the United States.

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
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.


Gabriel Nieves

After experiencing a variety of shortages, crises, and inefficiencies in the status quo of the procurement and distribution industry, I undertook the responsibility of building an interface for large organizations to abstract away uncertainty throughout their supply chain under most conditions.

We are focused on building a framework from which our teams of professionals on the ground can provide a new generation of procurement support and professional services for supply chain critical organizations around the nation.

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