How Do Pharmacies Make Money on Cheap Generic Pills?
How Do Pharmacies Make Money on Cheap Generic Pills?
Medicare paid about $22.50 for an average generic prescription in 2021. The pharmacy that filled it kept $3.87 — and never got to set either number.
This is how generic drug pricing actually works: who decides what your pharmacy gets paid, why the same pill costs different amounts depending on how you pay, and how a system built by pharmacists in the 1960s ended up squeezing them.
Sources: JAMA Health Forum, FTC Interim Staff Report, USC Schaeffer Center, RAND, Health Affairs.
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Video Summary
AI GeneratedThis video explores the opaque and dysfunctional reimbursement system for generic drugs in the US. It reveals how Pharmacy Benefit Managers (PBMs)—middlemen originally created by pharmacists—now dominate the market, squeezing pharmacy profits and controlling pricing through complex contracts, often leaving pharmacists with minimal margins or losses.