Fostering competition in the pharmaceutical distribution chain

Although a great deal of attention concerning prescription drug prices centers on the prices charged by pharmaceutical manufacturers themselves, markups in the distribution chain—pharmacy benefit managers, wholesalers, and pharmacies—are often substantial. Despite the large role that these actors play, little is known about the discounts they negotiate or markups they charge and how those relate to what patients ultimately pay.

On Wednesday, June 14, the USC-Brookings Schaeffer Initiative for Innovation in Health Policy hosted a forum to explore the many segments of the drug distribution chain and examined proposals to reduce price markups through increased competition.

The event featured a presentation of two new papers: one estimating profitability in the distribution chains of both branded and generic drugs and another proposing a transparency scheme to foster competition in the distribution of generic pharmaceuticals. Stakeholder panels followed the presentations of these two papers, to discuss approaches to increase competition in brand and generic drug distribution.