Kenneth Frazier, pharma giant Merck’s chief executive, criticized middlemen in the supply chain and discussed rising drug costs during an hour-long interview with the Economic Club of New York.
Frazier says after a drugmaker publishes its list price, pharmacy benefit managers receive discounts, according to a Business Insider report. Those savings, however, aren’t guaranteed to reach the end consumer.
“I don’t understand where we live in a world where 50 percent of the value goes to the supply chain,” he said.
The pharma executive said the industry could begin a stage of disintermediation in which fewer entities would stand between a drugmaker and a consumer.
“I know how hard it is to make my 50 cents on the dollar,” Frazier said. “I think that system’s got to change.”