Case Studies

Pharmacy Cost Trends and System Impacts: Drug Supply and Payments

September 1, 2016

Contact

Joseph W. Thompson, MD, MPH
President & CEO
501-526-2244
achi@achi.net

 

The pharmaceutical supply chain and payment framework represents a complicated network of interests. While pharmacies provide a direct link to consumers, PBMs in their intermediary role have a major impact on the negotiated rates that many health plans offer to their beneficiaries. There remains notable variation in the price retail pharmacies pay to acquire prescription drugs and the price consumers pay for their prescriptions, raising questions about the transparency of the drug supply chain and its pricing structure. As prices continue to rise, supply chain participants have turned to additional strategies to mitigate drug costs. Value-based payment strategies, which promote high value and high-quality healthcare services, offer opportunities to improve pharmacy management practices. The next installment of this series will focus on the rising costs of specialty drugs, representing a quarter of total commercial pharmaceutical spending, and will further explore options to reduce prescription costs while aligning provider and patient incentives.

This fact sheet explores the drug supply chain, price measures in the industry, and price negotiation approaches.