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Retirely in The things you own end up owning you,

If you own Eli Lilly stock, you better hope Bernie Sanders stops tweeting soon

“Eli Lilly also noted that while the list price for Humalog has gone up, the company receives a lower average net price now than it did in 2009. The company said its third-quarter earnings report on October 25 showed the insulin’s U.S. revenue fell 14 percent, driven by a 24 percent decline in net price.”

How?  How in the f*ck does this happen?

Well, you see, there’s MANY layers between the manufacturer and the patient.

The patient buys insulin from a pharmacy, and the pharmacy bills a pharmacy benefits provider, who is contracted with by an insurance company. The PBM negotiates pricing with the manufacturers, and takes a cut for being the “middleman” in the whole system. The pharmacy’s cost involves getting the drugs from a distributor, who is getting the drugs from the manufacturer. Some of those layers operate in parallel, some serve no purpose other than to provide an additional profit-taking layer to the whole process.

The ACTUAL price of a vial of Humalog (from Lilly direct) is only about $32.00. BUT, when you have distributors, retailers, PBMs, and others ALL inserting themselves in the chain and taking their cuts, you wind up with the retail price of ~$300.00.

Of course, not all insurance companies operate that way. Kaiser operates their own pharmacies, and buys direct from Lilly. There’s just the manufacturer, the insurance company, and the patient. So, if you’re a Kaiser patient on a “Gold” plan, you’re only paying 20% of Kaiser’s cost per vial, or a little over $6. On a “platinum” plan, that drops to about $3/vial.

A big part of the cost is the inherent inefficiencies in the way most health plans operate with regard to prescription benefits.