When costs rise, everyone points fingers. Transparency helps identify facts.

Three companies control 97% of the U.S. drug wholesale market, yet there is little public visibility into how pricing, fees, discounts, and affiliated businesses influence prescription drug costs.

Pillar 5: Demand transparency for prices and the practices of prescription drug wholesalers and their affiliated companies.

As PCMA’s Head of Research, Amanda Frost, PhD, writes, “the main role of wholesalers is to purchase drugs from manufacturers, sell them to pharmacies, and then transport them to pharmacies.” Yet, these companies have amassed a combined annual industry revenue of nearly $1 trillion. Frost continues:

“Despite the rather mundane description of wholesalers painting them as largely drug movers, their positioning in the middle of the supply chain means they exert significant influence over drug availability and pricing, especially generic drugs. Over 90% of the prescriptions filled in the U.S. every year are generic drugs, and wholesalers dominate nearly every aspect of their pricing between manufacturer and patient.”

While pharmacy benefit managers (PBMs) are becoming the most transparent actors in the supply chain, wholesalers occupy a trillion-dollar blind spot. The first step toward understanding this massive part of the supply chain is to ask questions that shine the light of transparency onto participants that are smack in the middle of the supply chain.

What can lawmakers do to understand where costs come from in the supply chain?

• Demand greater transparency into the pricing practices, fees, and affiliated businesses of prescription drug wholesalers.
• Follow the money for the 3.9 billion generic prescriptions dispensed each year.
• Create greater visibility into pharmacy services administrative organization (PSAO) -wholesaler arrangements that influence 89% of the independent pharmacy market, including PSAO licensure.
• Ensure policymakers can track how drug costs and fees flow through the wholesaler-PSAO-pharmacy system.

The Bottom Line: Sunshine is the best disinfectant. When everyone can see the facts, everyone can focus on solutions.

Explore all six pillars of the Path to Patient Affordability HERE and download our one pagers that go deeper on each policy recommendation HERE.

Next up: If advertising influences what Americans buy, does it influence what medicines they take?