Drug Channels delivers timely analysis and provocative opinions from Adam J. Fein, Ph.D., the country's foremost expert on pharmaceutical economics and the drug distribution system. Drug Channels reaches an engaged, loyal and growing audience of more than 100,000 subscribers and followers. Learn more...
It's time for Drug Channels Institute’s (DCI) annual update of vertical integration among insurers, PBMs, specialty pharmacies, and healthcare services within U.S. drug channels. As you can see below, we have updated and revised our infamous illustration of the major vertical business relationships within the largest companies.
These organizations continue to exert greater control over patient access, sites of care/dispensing, and pricing, although some have started to unwind their vertical integration strategies. Scrutiny of these companies’ actions continues to grow.
Super Bowl LX is almost here! Time for some blowout beer and snack commercials, occasionally interrupted by an actual football game. DCI’s hometown Philadelphia Eagles will not be going to the big game, so the city’s light poles will remain Crisco-free and upright.
While you wait for kickoff, please enjoy this month’s playbook of articles, intercepted for you from the Drug Channels gridiron:
In recent years, these companies have spent more than $16 billion to acquire management service organizations (MSOs) that oversee physician practices in such specialties as gastroenterology, oncology, ophthalmology, and urology.
Below, we highlight the largest MSO transactions and explore five ways wholesalers benefit from ownership in their downstream physician customers. Ultimately, these strategies may allow wholesalers to exert unprecedented control over market access for provider-administered drugs—if they can figure out how to realize this power.
In recent years, these companies have spent more than $16 billion to acquire management service organizations (MSOs) that oversee physician practices in such specialties as gastroenterology, oncology, ophthalmology, and urology.
Below, we highlight the largest MSO transactions and explore five ways wholesalers benefit from ownership in their downstream physician customers. Ultimately, these strategies may allow wholesalers to exert unprecedented control over market access for provider-administered drugs—if they can figure out how to realize this power.
Special launch pricing is available through October 27, 2025.
This report—our sixteenth edition—remains the most comprehensive, data-driven resource for understanding and analyzing the large and growing U.S. pharmaceutical distribution industry.
With 9 chapters, more than 400 pages, 187 exhibits, and over 850 endnotes, this report is unmatched in scope and depth. There’s simply no other resource like it.
Order today to secure your copy of this fully updated, revised, and expanded 2025-26 edition at special discounted prices.
The 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors remains the most comprehensive, fact-based tool for understanding and analyzing the large and growing U.S. pharmaceutical distribution industry. Widely regarded as the industry standard, this encyclopedic resource offers a definitive guide to wholesale distribution’s role in the complex web of U.S. prescription drug channels.
The chart below illustrates the vertical integration and broad reach of the three largest companies in U.S. pharmaceutical distribution. The numbers in the chart correspond to the report chapter that explains and analyzes the specific business segment.
Updated analyses of strategies, market positions, and executive compensation for the Big Three—Cencora, Cardinal Health, and McKesson. We review each company’s business segments and underlying business profitability, based upon our proprietary economic models. This allows you to assess differences among the public companies’ organizational structure and financial performance.
Self-contained chapters that do not need to be read in order. (Really!) There are loads of internal hyperlinks to help you navigate the document and customize it to your specific interests and priorities.
The option to download an additional PowerPoint file with images of all 178 exhibits. This popular option helps you share the insights and data with others in your organization. (The exhibits appear within the text for all license versions.)
760 (!) endnotes, most of which have direct hyperlinks to original source materials for deeper learning.
No SpongeBob Squarepants, corny jokes, or pop culture references, all of which have been reluctantly removed.
Thank you for your continued interest in our research. Please email me (afein@drugchannels.net) with any questions before purchasing.
We look forward to sharing this year’s insights with you.
With 9 chapters, 400+ pages, 187 exhibits, and 850+ endnotes, this report is unmatched in scope and depth. There is no other resource like it.
Preorder today to secure this fully updated, revised, and expanded 2025-26 edition at special discounted prices. Preorders ensure early access. You’ll receive the report before its October 14 release date.
Special preorder and launch pricing discounts will be valid through October 27, 2025. Act now to maximize savings.
The chart below highlights the three largest companies’ vertical alignment and diverse roles within the U.S. healthcare system. The numbers in the chart indicate the report chapter that corresponds to, explains, and analyzes each business.
[Click to Enlarge]
The 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors remains the most comprehensive, fact-based tool for understanding and analyzing the large and growing U.S. pharmaceutical distribution industry. Widely regarded as the industry standard, this encyclopedic resource offers a definitive guide to wholesale distribution’s role in the complex web of U.S. prescription drug channels.
Our 2025-26 edition contains the most current financial and industry data about the distribution of pharmaceuticals and the major companies that handle these products. As always, we have updated all market and industry data with the most current information available. The report also updates our annual analyses of the strategies, market positions, and executive compensation of the three largest companies: Cencora, Cardinal Health, and McKesson.
We review each wholesaler’s business segments and underlying business profitability, based upon our proprietary economic models. This information allows you to assess differences among the public wholesalers’ business organizations, strategies, and financial performance. Where appropriate, financial data have been restated based on updated disclosures.
Thank you for your continued interest in our research. Please email me (afein@drugchannels.net) with any questions before purchasing. We look forward to sharing this year’s insights with you.
Pharmacy services administrative organizations (PSAOs), which operate between pharmacy benefit managers (PBMs) and smaller pharmacies, are among the most mysterious—and misunderstood—intermediaries in our complex U.S. drug channel.
Adding to the mystery: the largest PSAOs are owned by the three multi-billion dollar, public companies that also dominate pharmaceutical distribution—Cencora, Cardinal Health, and McKesson. These companies sit atop the Fortune 500 list and distribute more than 96% of prescription pharmaceuticals in the U.S.
Below, we draw on data from our forthcoming 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors to profile the largest PSAOs and highlight crucial business trends affecting each company. We also examine how wholesalers are leveraging PSAOs as part of a broader vertical integration strategy that is building significant positions in businesses beyond drug distribution.
So, buckle up and let’s take a trip through the tollbooth to visit yet another overlooked—but powerful—corner of the drug channel.
In today’s fast-moving pharmaceutical marketplace, insight is everything. Whether you're building trust with customers, launching new products, or guiding internal teams, understanding the economic forces that shape drug distribution, reimbursement, and pricing is essential.
At Drug Channels Institute (DCI), we know how critical this knowledge is—and how hard it can be to find credible, up-to-date training that fits into a busy professional’s schedule. That’s why we created our DCI eLearning Modules: a suite of six interactive, expertly narrated courses that deliver must-know insights in 45 minutes or less.
These modules were built from the ground up for pharmaceutical professionals—from seasoned experts to newcomers looking to understand the industry's complex web of relationships. Each course distills our signature Drug Channels expertise into engaging, bite-sized lessons that are ideal for:
Sales and field teams: seeking clearer context for their customer conversations
Market access, training, and internal strategy groups: who need to understand payer and channel dynamics
Any professional: ready to level up their understanding of pharmaceutical economics
Each module features:
Interactive graphics and animations for improved retention
Expert voice-over narration to guide you through complex topics
References to key DCI reports for optional deep dives
iPad compatibility for learning on the go
The modules are available only via a site-wide license, giving your entire organization access through your internal learning platform. We also offer licenses to our secure hosted learning environment—no internal setup required! (Sorry, individual licenses are not currently available.)
What You’ll Learn: A Snapshot of Each Module
1. Follow the Dollar: How Funds Flow in the Distribution and Reimbursement Channels
This foundational course breaks down the financial and product flows in U.S. pharmaceutical distribution. You'll learn how money and medicines move between manufacturers, wholesalers, pharmacies, PBMs, and payers—and how each relationship affects costs and outcomes.
2. The Economics of Retail, Mail, and Specialty Pharmacies
Gain a clear-eyed view of how different pharmacy channels generate revenue and manage costs. Understand reimbursement dynamics, cost estimation methods, and how profitability varies across drug types and dispensing models.
3. The Business of Specialty Pharmacy
Specialty drugs are revolutionizing care—and reshaping the pharmacy business. This module explores how these products are distributed, covered by insurance, and supported through value-added services.
4. The Economics of Provider-Administered Specialty Drugs
Navigate the unique dynamics of provider-administered drugs, from buy-and-bill systems to ASP reimbursement. Understand how coverage types, care sites, and financial relationships affect access and profitability.
5. Understanding Pharmacy Benefit Managers
PBMs wield enormous influence—but many professionals may not fully understand their true impact. Learn how PBMs operate, where they make money, and how they interact with manufacturers, payers, and pharmacies.
6. Pharmaceutical Wholesalers: Business Strategies and Financial Economics
Take a deep dive into how wholesalers operate, generate profits, and provide critical services. You’ll come away understanding the difference between full-line wholesalers and specialty distributors—and why that matters for your strategy.
Bottom line: If you or your team work in any part of the pharmaceutical value chain, DCI’s eLearning modules will make you smarter, faster. They’re the shortest path to mastering the industry's most important (and most misunderstood) topics.
ICYMI, the largest three pharmaceutical wholesalers—Cardinal Health, Cencora, and McKesson—are using vertical integration to build significant market positions in businesses beyond drug distribution.
In the video clip below, I review the vertical integration status of the largest three pharmaceutical wholesalers, illustrated in the chart below.
[Click to Enlarge]
I also:
Explain how wholesalers have strengthened their position in buy-and-bill channels for provider-administered drugs through vertical integration with their downstream customers.
Discuss how and why private equity roll-up activity has provided wholesalers with strategic opportunities to acquire ownership stakes in practice management companies.
Outline the market access implications for provider-administered biosimilars in the buy-and-bill market.
Winter—or at least February—is almost over. Celebrate the imminent return of spring with our selection of noteworthy news from around the drug channel. In this issue:
How Part D plan sponsors responded to pharmacy DIR changes
Troubling new data on copay accumulators in marketplace plans
DCI’s latest vertical integration visualization
How the IRA will hurt physician practices
Plus, cartoon cats explain the 340B Drug Pricing Program.
ICYMI, the largest three pharmaceutical wholesalers—Cardinal Health, Cencora, and McKesson—are using vertical integration to build significant market positions in businesses beyond drug distribution.
In the video clip below, I review the vertical integration status of the largest three pharmaceutical wholesalers, illustrated in the chart below.
[Click to Enlarge]
I also:
Explain how wholesalers have strengthened their position in buy-and-bill channels for provider-administered drugs through vertical integration with their downstream customers.
Discuss how and why private equity roll-up activity has provided wholesalers with strategic opportunities to acquire ownership stakes in practice management companies.
Outline the market access implications for provider-administered biosimilars in the buy-and-bill market.
As regular readers of Drug Channels know, U.S. distribution and dispensing channels for prescription drugs are undergoing significant evolution and consolidation as the changing economics of pharmaceuticals challenge conventional business models.
During this period of volatility, the core business model of the Big Three public pharmaceutical distribution companies—Cardinal Health, Cencora, and McKesson—remains intact. Put simply: Buy low, sell high, collect early, and pay late.
But as I explain below, wholesalers continue to position themselves as essential intermediaries by expanding their industry position and strengthening their economic fundamentals.
Read on for five key pricing, pharmacy, provider, and manufacturer trends that are driving the U.S. drug wholesaling industry.
On October 8, 2024, Drug Channels Institute will release our 2024-25 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. This report—our fifteenth edition—remains the most comprehensive, fact-based tool for understanding and analyzing the large and growing U.S. pharmaceutical distribution industry.
9 chapters, 350+ pages, 178 exhibits, 750+ endnotes: There is nothing else available that comes close to this valuable resource.
We are providing you with the opportunity to preorder this thoroughly updated, revised, and expanded 2024-25 edition at special discounted prices. This means that you can be among the first to access our new report. Those who preorder will receive a download link before October 8.
Last fall, poor ol’ Rite Aid finally succumbed to bankruptcy. It was pretty much the definition of an expected surprise.
To get a comprehensive look at the company’s ever-declining fortunes, DCI rummaged around the compnay's numerous bankruptcy filings. Below, you’ll find our review of Rite Aid’s current financial situation, shrinking store footprint, changing relationship with key wholesaler McKesson, surprisingly optimistic projections, and more.
Drug Channels has been tracking retail pharmacies’ economic and business challenges—and Rite Aid’s troubles—for many years. Consider this article to be an opportunity for some fact-based analysis to replace your schadenfreude.
Bello! The hot and hazy days of summer are here. Go for a swim to cool off and then enjoy this refreshing selection of articles chosen by Drug Channels para tu.
Did the FTC’s compelling interim report prove its case?
GoodRx joins the Humira biosimilar price war with Boehringer Ingelheim
Averon revealed to be a new buying group for biosimilars for CVS Health and Cardinal Health
Why the IRA will be bad news for 340B hospitals
Plus, the June 2024 update to my all-time favorite chart. Muak muak muak!
Have you requested an invite to the inaugural Drug Channels Leadership Forum? Attendance will be highly limited, so apply now. Full agenda coming in early September!
Consider two apparently unrelated drug channel anomalies:
In McKesson’s 2023 fiscal year, CVS bought $75 billion in pharmaceuticals from McKesson’s wholesale business—a jump of more than 35% compared with the previous year.
Despite skyrocketing sales for anti-obesity GLP-1 drugs, many retail pharmacies are losing money on every prescription.
The common factor behind these two disparate situations: Pharmaceutical wholesalers’ unusual pricing for brand-name drugs sold to pharmacies, hospitals, and other buyers. Below, I walk through the economic fundamentals to help you understand another obscure aspect of our opaque drug pricing system.
In case you haven’t noticed, private equity firms have displaced hospitals and health systems as the major acquirers of community oncology practices. These financial firms have assembled significant oncology practice management companies that are primed for purchase by drug channel participants.
Below, I review recent M&A trends and then examine the strategic objectives behind the acquisition of private-equity-backed OneOncology by AmerisourceBergen (Cencora) and another financial buyer. As I explain, AmerisourceBergen (Cencora) gains significant strategic advantage from this transaction, which echoes a historical McKesson deal.
The Federal Trade Commission’s (FTC) has a newfound interest in the roll-up transactions that are creating practice management companies. Nonetheless, I expect this consolidation activity to continue—enabling a new round of vertical integration in the drug channel.
Consider two apparently unrelated drug channel anomalies:
In McKesson’s 2023 fiscal year, CVS bought $75 billion in pharmaceuticals from McKesson’s wholesale business—a jump of more than 35% compared with the previous year.
Despite skyrocketing sales for anti-obesity GLP-1 drugs, many retail pharmacies are losing money on every prescription.
The common factor behind these two disparate situations: Pharmaceutical wholesalers’ unusual pricing for brand-name drugs sold to pharmacies, hospitals, and other buyers. Below, I walk through the economic fundamentals to help you understand another obscure aspect of our opaque drug pricing system.
This week, I’m rerunning some popular posts while I prepare for tomorrow's live video webinar: Drug Channels Outlook 2026 .
I am pleased to announce Drug Channels Institute’s new 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, available for purchase and immediate download.
This week, I’m rerunning some popular posts while I prepare for tomorrow’s live video webinar: PBM Industry Update: Trends, Challenges, and What’s Ahead.
