Berkeley Research Group Study on the Pharmaceutical Supply Chain


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For purposes of this paper, we begin the analysis with “initial gross drug expenditures,” which we define as the sum of payments for prescription drugs made by patients and their health plans at the point of sale (e.g., pharmacy, outpatient hospital) prior to any rebate, discount, or fee provided by manufacturers. By using this starting point, the analysis makes it possible to measure prescription drug spending by consumers, health plans, government payers, and employers, and the portion thereof realized by manufacturer and non-manufacturer stakeholders.

This analysis indicates that brand manufacturers realize 39 percent of initial gross drug expenditures. Of the remainder, 42 percent is realized by non-manufacturer entities, including amounts realized by participants in the supply chain (22 percent) and transferred by manufacturers to other stakeholders through retrospective rebates, discounts, and fees (20 percent).