Why are drugs in the US priced differently based on which pharmacy you go too?
How are drugs even priced in the US? Is there some sort of standard?
I think pharmacies negotiate pricing with pharma companies on their own, which leads to pricing fluctuation. Add in the insurances that negociate pricing with pharmacies and you have one more level of fluctuation.
This is incorrect.
KrisHanson thanks for providing 0 insight with that answer 🙄
The pharmaceutical distribution system is complicated and is subject to many of the same market forces that impact other industries. The industry is moving towards more vertical alignment where based on your coverage, the pharmacy, pbm and wholesaler have contracts in place to incentivize utilization at entities owned in part or whole. From a manufacturer perspective, it’s incredibly expensive to develop drugs and includes substantial inherent risk. Lots of hands also touch a drug between the time it leaves the production line and gets dispensed, everyone takes a cut.
This is all correct, but leaves out price inflation sure to PBMs and all the different drug prices and discounts
They are effectively randomly priced based the amalgamation of multiple companies desires to profit via volume and margins.
Welcome to free market
Profit.
I had no idea it was pharmacy-dependent.
Check GoodRx.
We’ve been trying to answer this question for years
We negotiate prices with a wholesaler and set prices based on contracts. The spread between these negotiations leads to our small margins. Ultimately drug prices are set by the manufacturer based on the US consumer’s willingness to pay.
You forgot to mention PBMs
I am speaking from the perspective of a PBM
Look up Pharmacy Benefit Managers. They are middlemen who control which drugs insurers cover and which ones end up in pharmacies. Pharma companies are incentivized to jack up the price of drugs so that they can offer a bigger rebate to the PBMs (which they pocket) so that the PBM will put their drug on the formulary (list of drugs insurance companies will cover).
Exactly, AbbVie had difficulty securing access for a new drug that had better efficacy and was priced lower than other competing drugs because the rebate dollars for the PBM would be lower. Net drug prices for manufacturers have actually grown slower than CPI over the last decade.
Some PBMs, like Envision, pass through rebates to the members and clients. Ultimately the employer chooses what is covered.
They’re priced for maximum possible profit.