Fall has brought a fresh round of questions about how drug channel economics affect patients, plans, and providers.
Take a break between your work sets to catch up on some quality resources for understanding the drug channel.
In this issue: Extra: Four Ways to Bag a Drug
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NOW AVAILABLE: The 2026-27 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors
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Out-of-Pocket Payments Among Medicare Beneficiaries Who Reached the Inflation Reduction Act's Part D Spending Cap, JAMA Health Forum
The Inflation Reduction Act's 2025 $2,000 Part D cap set a ceiling on qualifying out-of-pocket spending. However, the amount beneficiaries actually pay on the way to that threshold varies with plan design.
A JAMA Health Forum study funded by Humana used Humana claims to examine beneficiaries who reached the cap in 2025. Among non-low-income Humana beneficiaries in the study, average cost sharing was $832 for MAPD enrollees and $1,298 for stand-alone PDP enrollees.
The gap reflects enhanced plan coverage and the way true out-of-pocket (TrOOP) spending is calculated. Amounts paid by a plan for enhanced benefits can count toward the beneficiary's TrOOP threshold, even when the beneficiary pays only a copay at the pharmacy. Enhanced coverage was nearly universal among MAPD beneficiaries in the study, while a smaller share of PDP beneficiaries had it.
Only 2.1% of non-LIS MAPD beneficiaries who reached the cap had paid the full $2,000 themselves, compared with 12.6% of PDP beneficiaries.
Here's how MAPDs and PDPs compare on several metrics.
A JAMA Health Forum study funded by Humana used Humana claims to examine beneficiaries who reached the cap in 2025. Among non-low-income Humana beneficiaries in the study, average cost sharing was $832 for MAPD enrollees and $1,298 for stand-alone PDP enrollees.
The gap reflects enhanced plan coverage and the way true out-of-pocket (TrOOP) spending is calculated. Amounts paid by a plan for enhanced benefits can count toward the beneficiary's TrOOP threshold, even when the beneficiary pays only a copay at the pharmacy. Enhanced coverage was nearly universal among MAPD beneficiaries in the study, while a smaller share of PDP beneficiaries had it.
Only 2.1% of non-LIS MAPD beneficiaries who reached the cap had paid the full $2,000 themselves, compared with 12.6% of PDP beneficiaries.
Here's how MAPDs and PDPs compare on several metrics.
[Click to Enlarge]
The Size of the 340B Program: Patient and Payer Spending on Drugs Purchased through the 340B Program Reached $244 Billion in 2025, Berkeley Research Group
A new BRG analysis funded by PhRMA estimates that patients and payers reimbursed covered entities about $244.3 billion in 2025 for medicines purchased through 340B. That estimate includes $102.1 billion in discounted acquisition costs and an estimated $142.2 billion difference between acquisition cost and reimbursement.
Most estimates up to this point used the difference between acquisition cost and list price as a proxy for 340B margin, but reimbursement doesn't have to be limited to either metric. For example, this NEJM paper found the median price markup by hospitals was 3.08x the acquisition price for hospitals eligible for 340B discounts.
Here's how BRG's estimates describe the program's growth as a percentage of total U.S. net drug spending.
Its analysis attributes 88% of the 2025 margin as coming from commercial and Medicare payers, similar to what we found for Minnesota.
These figures are estimates of total reimbursement, not a comprehensive accounting of reported transactions. More detailed public reporting would help answer how much is retained and how it supports care.
Most estimates up to this point used the difference between acquisition cost and list price as a proxy for 340B margin, but reimbursement doesn't have to be limited to either metric. For example, this NEJM paper found the median price markup by hospitals was 3.08x the acquisition price for hospitals eligible for 340B discounts.
Here's how BRG's estimates describe the program's growth as a percentage of total U.S. net drug spending.
[Click to Enlarge]
Its analysis attributes 88% of the 2025 margin as coming from commercial and Medicare payers, similar to what we found for Minnesota.
These figures are estimates of total reimbursement, not a comprehensive accounting of reported transactions. More detailed public reporting would help answer how much is retained and how it supports care.
Evolving PBM Economic Models: Implications for Cash Flow and the Time Value of Money for Commercial Plan Sponsors, Milliman
Manufacturer rebates often reach a plan several months after the prescription is filled, which separates the drug's point-of-sale price from the plan's eventual net cost. Milliman compares retrospective rebates with two models that apply rebate value at the pharmacy counter.
Here's a summary of the three approaches and the modeled tradeoffs.
In Milliman's illustrative high-deductible plan, member cost sharing was about 15% lower PMPM under both point-of-sale approaches. The plan liability for the first year was modeled as over 16% below the retrospective model with traditional point-of-sale rebates and over 17% below it with a net price model.
In year two, both point-of-sale approaches had roughly 8% to 9% higher plan liability than the retrospective model after the original retrospective rebates from months earlier stopped rolling in. The additional plan liability is almost completely from less cost being shifted to the patient. This shows how patients benefit directly from the Net Pricing Drug Channel (#NPDC).
Here's a summary of the three approaches and the modeled tradeoffs.
[Click to Enlarge]
In Milliman's illustrative high-deductible plan, member cost sharing was about 15% lower PMPM under both point-of-sale approaches. The plan liability for the first year was modeled as over 16% below the retrospective model with traditional point-of-sale rebates and over 17% below it with a net price model.
In year two, both point-of-sale approaches had roughly 8% to 9% higher plan liability than the retrospective model after the original retrospective rebates from months earlier stopped rolling in. The additional plan liability is almost completely from less cost being shifted to the patient. This shows how patients benefit directly from the Net Pricing Drug Channel (#NPDC).
The Cigna Group's 2026 Investor Day, The Cigna Group
At its 2026 Investor Day, Cigna announced Evernorth Wholesale Distribution, a new channel alongside CuraScript SD intended to open access to additional medications and customers.
Cigna described CuraScript as a roughly $25 billion revenue business, with internal sales included in that figure. Management also discussed a goal of adding about $20 billion in distribution revenue by 2030. That target includes several growth drivers, including organic growth and sales to Cigna's own pharmacies—it is not a forecast for Evernorth Wholesale Distribution alone.
Here's what Cigna's expansion could mean for the wholesaler channel.
Evernorth Wholesale Distribution can retain margin previously paid to an outside wholesaler by supplying more to its own pharmacies, but mail/specialty margins are a fraction of a percent. It's unlikely they take much profit from the channel in the near term, but there's potential for expansion over time.
Cigna described CuraScript as a roughly $25 billion revenue business, with internal sales included in that figure. Management also discussed a goal of adding about $20 billion in distribution revenue by 2030. That target includes several growth drivers, including organic growth and sales to Cigna's own pharmacies—it is not a forecast for Evernorth Wholesale Distribution alone.
Here's what Cigna's expansion could mean for the wholesaler channel.
[Click to Enlarge]
Evernorth Wholesale Distribution can retain margin previously paid to an outside wholesaler by supplying more to its own pharmacies, but mail/specialty margins are a fraction of a percent. It's unlikely they take much profit from the channel in the near term, but there's potential for expansion over time.
Brown Bagging vs. White Bagging vs. Clear Bagging vs. Gold Bagging, Bryce Platt on LinkedIn
Provider-administered drugs can reach the treatment site through several channels outside the traditional buy-and-bill model. The terms can sound like grocery-store packaging, but they describe who dispenses the drug and how it gets to the provider.
Here's a direct comparison of the four bagging models.
There aren't strict definitions for these models, but the choice affects inventory, custody, billing, patient workflow, and the distribution of costs. The LinkedIn post notes that payer savings can coincide with higher patient out-of-pocket costs, depending on the arrangement. For additional background on the evolution of white bagging, see White Bagging Update 2024: Providers' Pushback Preserves Buy-and-Bill.
Here's a direct comparison of the four bagging models.
[Click to Enlarge]
There aren't strict definitions for these models, but the choice affects inventory, custody, billing, patient workflow, and the distribution of costs. The LinkedIn post notes that payer savings can coincide with higher patient out-of-pocket costs, depending on the arrangement. For additional background on the evolution of white bagging, see White Bagging Update 2024: Providers' Pushback Preserves Buy-and-Bill.
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