• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year

2

Now worth $200 million, Sarah Jessica Parker credits being ‘one of eight kids that struggled financially’ for her hunger, ambition, and work ethic

3

Ikea’s billionaire founder was so frugal that he bought clothes from flea markets and took free salt and pepper from restaurants

1

MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year

2

Now worth $200 million, Sarah Jessica Parker credits being ‘one of eight kids that struggled financially’ for her hunger, ambition, and work ethic

3

Ikea’s billionaire founder was so frugal that he bought clothes from flea markets and took free salt and pepper from restaurants
HealthBrainstorm Health

Two Stories That Help Explain Runaway Drug Prices

By
Clifton Leaf
Clifton Leaf
Down Arrow Button Icon
By
Clifton Leaf
Clifton Leaf
Down Arrow Button Icon
June 30, 2017, 1:32 PM ET
Add Fortune on Google for similar content.

Having now decamped to their home sanctuaries for the Fourth of July weekend, Senate Republicans may get a momentary break from the pressure to have to vote on a Trumpcare bill their leadership wants, the President sort-of seems to want—and four-fifths of Americans appear to detest.

Good.

After the fireworks and festivals, the barbecues and backyard banquets, maybe they’ll get to curl up on their senatorial Barcaloungers in their well-appointed senatorial dens, and read.

They can start with a pair of articles that were published by Bloomberg this morning and yesterday.

This morning’s piece, by Robert Langreth, explores why the prices for many generic drugs—including essential cancer-fighting medicines—have risen, in some cases to an “extraordinary” degree, according to the Government Accountability Office. Prices for roughly 300 generic drugs at least doubled from 2010 to 2015.

In yesterday’s article, Langreth and Paul Barrett point to what some plaintiffs allege is a more scandalous behind-the-scenes arrangement that’s helping to drive drug costs ever higher: that drug makers raise their prices in part to allow middlemen known as pharmacy benefit managers, or PBMs, to demand fatter rebates on those drugs, which they then share with their clients (who are the companies ultimately paying the coverage bills and who hire the PBMs to lower their costs).

Got that?

“One of the main functions of PBMs,” explain Barrett and Langreth, “is to elicit rebates from drug manufacturers on behalf of health plans. The incentive—or threat—is that if drug companies fail to pay rebates, they might not win spots on a list of preferred medications that the PBMs maintain. Absence from the list, known as a formulary, means that health plans won’t cover the drugs in question, which would cut into the manufacturers’ sales.”

The drug at the heart of four lawsuits in New Jersey is insulin—“a century-old medicine that for most of its history cost $15 or less,” write Barrett and Langreth, but “whose list price has risen more than 270 percent over the past decade.”

Federal prosecutors, report the Bloomberg writers, “are also investigating relationships between PBMs and large drug companies” and the U.S. Attorney’s Office in Manhattan has ordered three makers of insulin to turn over documents regarding those relationships.

(“The three drug companies say they’re cooperating with the government’s document demands,” Bloomberg reports. “The same companies and the three PBMs say the private suits are meritless”—with one PBM CEO declaring: “It is a complete falsehood that we would prefer prices to go up.”)

The PBM clients, in any case, benefit from the rebates—though it’s hard to know how much because, as the Bloomberg writers point out, the after-rebate “net price” they ultimately pay is confidential. But others—notably the uninsured—are left to pay the higher list prices. And, as Barrett and Langreth write, drug makers often raise those list prices “to make up some of the lost revenue” from rebating.

FORTUNE contributor Katherine Eban dove into the murky PBM-client-drugmaker nexus back in 2013, in a classic feature entitled, “Painful Prescriptions.” And it would seem that little has changed since then.

Maybe the senators will, in their quiet time at home, absorb this thoughtful reporting—then come up with some good ideas to combat the outrageous surge in the price of medicines, and of healthcare in general. Maybe that’s a way for them to deliver on their promises to their constituents—who really just want some way to afford the medications their families need, not have their insurance taken away or their premiums surge.

Then, maybe next Independence Day, when they’re at their hometown fireworks display, some good soul might come over to hand them a cold beer—which is what big-hearted Americans do on the Fourth of July.

 

This essay appears in today’s edition of the Fortune Brainstorm Health Daily. Get it delivered straight to your inbox.

About the Author
By Clifton Leaf
See full bioRight Arrow Button Icon
Add Fortune on Google for similar content.

Latest in Health

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025

Most Popular

Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Finance
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam
By Fortune Editors
October 20, 2025
Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • Pinterest icon

Latest in Health

apes
HealthAnimals
Scientists tickled monkeys to find if they have the same giggles as humans — and they do
By Adithi Ramakrishnan and The Associated PressJune 25, 2026
15 hours ago
Tru Niagen
HealthDietary Supplements
Tru Niagen Review (2026): Our Honest Thoughts
By Emily PharesJune 25, 2026
19 hours ago
ll
Economysummer
Deviled eggs, seltzer and a burger you can’t quit: The GLP-1 crowd is (halfway) reinventing the American BBQ
By Nick LichtenbergJune 25, 2026
23 hours ago
A pedestrian walks past a Gucci luxury fashion store at a shopping district on June 24, 2026, in Shenzhen, Guangdong Province, China.
RetailLuxury
Rich consumers taking GLP-1s are rebuying their wardrobes and eating smaller, fancier dishes—it’s a factor saving the luxury sector right now
By Eleanor PringleJune 25, 2026
1 day ago
Ikea’s billionaire founder was so frugal that he bought clothes from flea markets and took free salt and pepper from restaurants
SuccessBillionaires
Ikea’s billionaire founder was so frugal that he bought clothes from flea markets and took free salt and pepper from restaurants
By Orianna Rosa RoyleJune 25, 2026
1 day ago
How ‘Ozempic face’ is pushing Gen X, already the biggest Botox and filler consumers, to the facelift table a decade early
HealthGen X
How ‘Ozempic face’ is pushing Gen X, already the biggest Botox and filler consumers, to the facelift table a decade early
By Mia OsmonbekovJune 24, 2026
2 days ago

Most Popular

MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year
Success
MacKenzie Scott alone accounted for one-third of America's $19.2 billion in megagifts last year
By Sydney LakeJune 25, 2026
1 day ago
Now worth $200 million, Sarah Jessica Parker credits being ‘one of eight kids that struggled financially’ for her hunger, ambition, and work ethic
Success
Now worth $200 million, Sarah Jessica Parker credits being ‘one of eight kids that struggled financially’ for her hunger, ambition, and work ethic
By Orianna Rosa RoyleJune 24, 2026
2 days ago
Ikea’s billionaire founder was so frugal that he bought clothes from flea markets and took free salt and pepper from restaurants
Success
Ikea’s billionaire founder was so frugal that he bought clothes from flea markets and took free salt and pepper from restaurants
By Orianna Rosa RoyleJune 25, 2026
1 day ago
Current price of oil as of June 25, 2026
Personal Finance
Current price of oil as of June 25, 2026
By Joseph HostetlerJune 25, 2026
1 day ago
Current price of silver as of Thursday, June 25, 2026
Personal Finance
Current price of silver as of Thursday, June 25, 2026
By Joseph HostetlerJune 25, 2026
1 day ago
Trump turns on Big Oil donors who spent nearly $100 million to get him elected—now he wants the DOJ to investigate them for price gouging
Economy
Trump turns on Big Oil donors who spent nearly $100 million to get him elected—now he wants the DOJ to investigate them for price gouging
By Tristan BoveJune 25, 2026
16 hours ago

© 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.