Pharmaceutical Middlemen Quietly Reap Profits on Generic Markups


The state of New York contracts with private insurers to cover the state’s low-income population, and these insurers often contract with Pharmacy Benefit Managers (PBMs) to handle prescription drug coverage. PBMs commonly put markups on medications to profit as an actor in the pharmaceutical supply chain. These markups vary from state to state, with some state Medicaid programs getting a better deal than others. The Pharmacists Society of the State of New York studied the state’s Medicaid program to understand what kinds of markups are being applied to medications sold in the state, and it revealed that PBMs are marking up generic drugs by 32 percent when billing the state’s Medicaid program. Competition among generic medications can be fierce and the margin for profit can be very thin. With PBMs taking an increasing share of the profit margin, other actors in the supply chain, such as small pharmacies, are suffering. Read the full story here:


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