The Cost of Pharmaceuticals: Prescription Drug Prices and Retail Mark Up
American Public University

Anyone who has purchased prescription medication has probably wondered why they cost so much. The pharmaceutical industry has thousands of companies that partake in of discovering, developing, manufacturing and marketing medication for humans to use. The price that is paid to a retail pharmacy for a drug is arrange by the PBM (Pharmacy Benefit Manager) and the pharmacy or pharmacy chain. The pharmacy is left with refusing the deal or raising its prices for cash customers. Pharmacies have a tendency to rise the prices of medication if the manufacters compinies go up on their price but they also look for their customers by the use of generics and cheaper over the counter products.. Thus, a pharmacy business is not much different from any other business. The cost of mortgage, employee wadges, insurance, prescription cost, and geographiac location are expenses that contribute to the cost of medication variability.
Pharmacies profit margin are based on how much they paid for a prescription drug. It’s the process by which drug prices are determined. Many instances, a manufacturer will provide a cash rebate to an insurer or PBM if the manufacturer’s drugs are used by the insurer’s or PBM’s enrollee. Unfortunately, information about the relative size, prevalence and characteristics of the cost of medication is quite limited. The records are confidential, private arrangements negotiated between manufacturers and insurers or PBMs. Because these allowance primarily affect the overall price paid for prescriptions of insured individuals, failure to account accurately for the value of such allowance happends to understate the price differences facing one with or without insurance. The MEPS and IMS Health enables us to examine differences in the prices paid by consumers at the