It is generally accepted that the drugs will be available or shipped from the selected pharmacy and all will be good. It is worth noting that about 90% of the drugs dispensed are generic drugs (1, 2) and sourced through various suppliers under Medicare healthcare plans. According to US Census Bureau about 92.1 % of the US population has healthcare coverage (3). The numbers suggest that majority of the US population has access to generic drugs. However, issues of shortages and unaffordability prevails. Brand drug prices are not part of the discussion. Due to lack of any immediate competition they set their own sale prices.
Pathway of the generic drug to the patient and pricing needs some explaining. PBMs (pharmacy benefit managers and their partners) purchase the drugs from manufacturers and distribute them. Their mission is maximize profits.
Prescribers generally do not know the breakdown of the monies they pay i.e. cost of the drug, handling and shipping etc. Patient pays the price their drug provider charges. Table 1 reviews the price breakdown for two drugs.
One of the age old trading practices is to pressure the manufacturer to lower their selling price. If the manufacturer does not make their desired profit, they will not sell the drug to PBMs and this will result in shortages. Patients will experience these. For PBMs drug becomes an “ITEM” of trade rather than a person’s life depends on it. To them profits are more important than the life of the patient/customer.
Generally a cost breakdown of any drug is not in public domain. Their discussion is healthy as many ambiguities can be cleared. A cost breakdown and comparison with and without insurance (4) gives us the landscape. CostPlusdrugs.com (5) drug price breakdown is reviewed here. Prices of GoodRx.com (6) can be used for comparison. A review clears any misconception one could have. Perspective here reviews the cost of the generic drugs from the factory floor to the patient. Similar but different scale of numbers apply for the brand drugs. I am not influenced by any for or non-profit entity. Observations presented are my own.
With such a large population being covered by various healthcare drug programs it is my belief that number of patients going outside their healthcare system to purchase drugs is going to be minimal. For patient going out of the network would be an anomaly. It would be same as an impulse purchase. It is well known fact that such purchases are high priced (4). Thus listing of “retail prices” on respective sites (5,6) seems more like a scare tactic than a reality as very limited number will purchase drugs at retail prices.
Even if manufacturing companies make a concerted effort to lower their manufacturing costs by using better processing technologies that can significantly lower their current environmental emission impact and are able to improve profits at their level, landscape will not change much. US will continue to see generic drug shortages (7) as PBMs will continue to pressure manufacturers to lower their selling prices.
An analysis of adventure by Amazon, Berkshire Hathaway and J.P. Morgan (8) was bound to fail from the onset as they had no comprehensive and rational plan. Out of the box thinking” was needed but not considered (9, 10). Only viable alternate is that drug manufacturers take over the distribution and compete (7). Competition will be lower overall drug prices and will be an overall win for the country. Generally it is.
Table 1 is a comparison of factory drug prices and what a customer would pay if they bought the drugs from Costplus Drug Company (5)and /or Amazon. Amazon does provide medications at discounted prices but details are not available unless one signs up (11).
There are two notable features of Costplus Drug and GoodRx companies. Unlike other drug plans patients do not have to become their subscriber.
Table 1: Price comparisons
4. Malhotra, Girish: Systematic Demystification of Drug Price Mystique and the Needed Creative Destruction, Profitability through Simplicity, October 2, 2019
5. Costplus Drug Company https://costplusdrugs.com
6. GoodRx https://www.goodrx.com
7. Malhotra, Girish: Roadmap to Reduce Drug Shortages and Bring Pharma Manufacturing Home (US), Profitability through Simplicity, October 30, 2023
8. Malhotra, Girish: Could Amazon (A), Berkshire Hathaway (B) and J.P. Morgan Chase (M) be the Anti- Ballistic Missile (ABM) needed to Control/Curb Rising Healthcare Costs? Profitability through Simplicity, February 9, 2018
9. Malhotra, Girish: Opportunities to Lower Drug Prices and Improve Affordability: From Creation (Manufacturing) to Consumption (Patient), Profitability through Simplicity, March 9, 2018
10. Malhotra, Girish: Improving Drug Affordability for the United States Populous through Alternate Business Models, Profitability through Simplicity, May 4, 2018
11. Amazon: Courtesy Dr. Albinus D’Sa Senior Advisor November 19, 2023
12. Malhotra, Girish: Active Pharmaceutical Ingredient Manufacturing: Nondestructive Creation De Gruyter April 2022