Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
If you are looking for why the cost of medications are so high, look no farther than the PBM's. They set the prices that the insurance company pays for the medications and they set the prices that they pay the pharmacies. They also get "kickbacks" for putting certain medications on there formulary. These are at least three places that the price is passed on the the customer through higher copays and higher cost of insurance. For part D insurance the government has let the PBM have something called a DIR fee. This year they have clawed back over $12,000 from this small store. This money does not go to the customer, it is a cost to them because they get in the do-nut hole. This is like me hiring you to represent me and after paying you for six months, I decide you have not represented me properly, so I want my money back and take it back from future payments. So you loose the place you rent and have to trade your car in for one that doesn't have a heater and are not able to buy any new clothes because of this clawback.