Mods: please feel free to update to your liking.

As someone who can look up double digit profit margins for Eli Lilly/J&J/Pfizer/Novartis/Novo Nordisk/Abbvie/Merck/etc, it doesn’t look like a complicated problem.

This issue has been so well-known that it has been addressed in national legislation as early as 1992 and in federal court in 2009, but the new integrated PBM's managed to sidestep regulation and transparency.

Bulk contracts specify price as a percentage of various averages (like driving contracts off LIBOR or federal funds rate), but there are few enough players and prices are private, inviting list price inflation. Contracts are not actually using federally-regulated/defined metrics (WAC, NADAC) but legacy (unregulated) AWP.

The few owners of the main PBM's (roughly matching public capital value):

- Cigna/Evernorth/Express Script: Qualient (most expansive offerings)

- CVS: Cordavis

- UnitedHealth/Optum: Nuvaila

Integrated players give themselves a discount but charge others inflated rates. The insurers might also patients charge more for going to out-of-network pharmacies. Both are relatively normal mechanisms to capture benefits of integration.

Very helpful post (but structural solutions out of scope)