A simple fact is often lost in the din of the current drug pricing debate going on in Washington D.C. and around the country:

Drug companies retain the great majority of the prescription drug dollar. 

What is the prescription drug dollar? Imagine $1 is spent on prescription drugs at the retail pharmacy. PCMA analyzed prescription drug data from IQVIA, Pembroke, Altarum, USC Schaefer, and Health Affairs, finding that drug companies keep 65 percent of that hypothetical drug dollar, giving the industry trillions of dollars in revenue and some of the highest profit margins of any industry.

Drug companies are working to increase their revenue even more by setting high launch prices, which they then continue to raise. The median monthly price for newly approved drugs nearly tripled from $2,624 in 2011 to $7,034 in 2022.

On the other hand, pharmacy benefit companies only retain six percent of the drug dollar – or six cents out of that $1 spent on prescription drugs at the retail pharmacy — while providing immense savings and value for patients, employers, and taxpayers.

Where does that six percent go? The share of the drug dollar retained by pharmacy benefit companies pays for a wide range of valuable services, including:

• Helping improve patient safety by detecting harmful drug interactions and reviewing patients’ drug utilization.
• Administering adherence and medication therapy programs to help patients stay on prescription drugs and improve health outcomes.
• Promoting lower cost generic drugs.
• Negotiating with drug companies and pharmacies to achieve lower drug costs for patients and health plan sponsors.

Below is the breakdown of the prescription drug dollar, highlighting the nearly two-thirds retained by big drug companies:

The root cause of high drug prices is clear – big drug companies setting high prices. Congress should focus on reforms that improve competition in the prescription drug market and curb the abuse of the patent system, which leads to higher profits for drug companies at the expense of American patients and families.

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See the Share of the Drug Dollar infographic HERE.

Learn what a world without pharmacy benefit companies would look like HERE.

See PCMA’s guide to understanding the role and value of pharmacy benefit companies HERE.

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PCMA is the national association representing America’s pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients. Learn more at www.pcmanet.org