Senior Fellow in Business and Economics at the Pacific Research Institute and EconoSTATS Managing Editor Wayne Winegarden said the process for pricing pharmaceuticals is one Lewis Carroll’s Mad Hatter “could surely appreciate.”
Winegarden in a column on Forbes gave the rundown of the pricing process, beginning with the manufacturer’s list price, leading to a questionable amount of formulary dictation on behalf pharmacy benefit managers’, who also take a share of savings following price negotiations.
“PBMs encourage this convoluted scheme because they receive a share of the concession given up by the pharmaceutical industry,” Winegarden writes. “Put differently, PBMs receive more money due to the combination of high pharmaceutical list prices, offset by large discounts and rebates that lower the effective transactions prices.”
The process, Winegarden writes, is ultimately detrimental to the patient.