Tony Talks Business
How Pharmacies Make Money
Walk into a pharmacy, hand over a prescription, and pay whatever the screen tells you to pay. On a good number of those transactions, the pharmacy itself is losing money. The company that actually gets paid never touched the box, never saw you, and doesn't have a shop, and there's a decent chance you couldn't name it if you had an hour. Three companies control about 80 percent of every prescription claim in America, and the way they make their money explains why your local pharmacy is closing, why an insulin vial went from 21 dollars to 274, and why the sickest, least insured people end up paying the price nobody else has to.
This is how pharmacies actually make money, and the pharmacy is the part of the business you're allowed to see.
Chapters
- 0:00Intro: the pharmacy losing money on your prescription
- 0:22Three companies, 80% of every prescription claim in America
- 0:42The counter is not the business
- 0:47Why PBMs were invented, and the honest defence of them
- 2:15What's the most you've ever paid for one prescription?
- 2:37The machine: two ways a middleman makes money
- 2:46Spread pricing, the simple one
- 3:27The rebate and the formulary, the one that actually runs the industry
- 4:44The gross-to-net bubble: $334 billion that exists only on paper
- 5:07The insulin case study: $21 to $274
- 6:01Who actually pays the fake price
- 6:46The FTC sues all three middlemen
- 7:51Two down: the Express Scripts and CVS Caremark settlements
- 8:01The offshore rebate collectors: Zinc, Ascent, Emisar
- 8:51Vertical integration: CVS owns the insurer, the PBM, and the pharmacy
- 9:49The CVS numbers: the middleman division out-earns every store by $51B
- 10:33Independent pharmacies getting crushed
- 11:36So, where does the money actually come from
- 12:44The reform wave: state laws, the FTC, Congress
- 14:05You were in the room, but you weren't a party to the transaction
