I recently collaborated with Julie Appleby at Kaiser Health News (KHN) to explain the flow of funds between a pharmaceutical manufacturer and the patient.
The resulting graphic (below) uses a typical brand-name prescription to show the profits earned by key drug channel participants: manufacturers, pharmacy benefit managers (PBMs), wholesalers, and pharmacies. It also illustrates the payer’s net costs and manufacturer’s net price.
KHN’s well-produced design complements the less pretty Rube Goldberg diagram that I shared in Follow the Dollar: The U.S. Pharmacy Distribution and Reimbursement System. The KHN chart may look like a PTCTU*, but it will help you understand the method to the madness.
If you squint hard, you’ll see “Pembroke Consulting” credited in teeny 4-point type in the chart’s footer. KHN’s estimates and its sources come from the following materials:
- Exhibits 101, 118, and 122 from The 2016 Economic Report on Retail, Mail, and Specialty Pharmacies
- Exhibit 45 from The 2016–17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors
[Click to Enlarge]Source: Tracking Who Makes Money On A Brand-Name Drug. Click here to download the graphic as a PDF. Note that this example is illustrative. It is not intended to represent every type of financial relationship, contract, and product flow in the marketplace.
* PTCTU: Process Too Complicated To Understand