Prescription Drugs: Flowchart Text Version

02/20/2020

Pharmaceutical supply chain includes 6 parties: payers, consumers, pharmacies, pharmacy benefits manager, distributor, and drug manufacturer.

  1. Drugs are shipped through the following parties:
    1. Drug manufacturer ships bulk drugs to distributor
    2. Distributor ships bulk drugs to pharmacies
    3. Pharmacies ship dispensed drugs to consumers
  2. Money passes through the following parties:
    1. Pharmacy benefits manager share manufacturers rebates with payers
    2. Payers reimburse pharmacy benefits manager with share of manufacturer rebates
    3. Consumers pay premiums to payers
    4. Consumers pay pharmacies a copayment
    5. Pharmacy benefits manager provides payment to pharmacies for dispensed drugs
    6. Pharmacies provide payment for wholesale drugs to distributor
    7. Distributor provide payment for wholesale drug to drug manufacturer
  3. Contracting agreements occur between the following parties
    1. Drug manufacturers have formulary agreement with pharmacy benefits manager and distributor agreement with distributor
    2. Pharmacies have network agreement with pharmacy benefits manager and prime vendor agreement with distributor
    3. Pharmacy benefits manager has PBM agreement with payers
    4. Payers have insurance contract with consumers
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