Nancy L. Yu, Preston Atteberry, Peter B. Bach: Spending On Prescription Drugs In The US: Where Does All The Money Go?: "The US pharmaceutical industry is characterized by a complex and often opaque system of distribution and reimbursement...

...in which the business models of multiple intermediaries rely on revenue from fees, price mark-ups, and after-the-fact rebates. To provide a comprehensive overview of these revenues, we quantified the gross profits retained by each group of supply chain participants, arriving at an estimate of annual gross profits of $480 billion per year. This estimate is close to the ASPE estimate of $477 billion, but only by coincidence. That report combines the NHE estimate of retail outlets’ prescription drug sales ($328 billion, based on invoice payments in retail transactions) and Altarum’s estimate of $128 billion for non-retail drug sales, while our approach aggregated the revenues retained by each intermediary. Our analysis focuses on the revenue in the pharmaceutical sector, not the funding of it. Although we believe this is an important perspective from which to examine the prescription drug market, we recognize that these are indeed estimates and others will make (and have made) different choices in their approach to quantifying the overall market and its various sectors...


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