Economics
Drug Middlemen Have Slim Profit Margins -- Just Ask Them
- Accounting approach plays down rich profits, critics contend
- CVS, Express, OptumRx say their tally reflects credit risk
Trump vs. Big Pharma: Can He Bring Drug Prices Down?
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Companies of all kinds try to present their financial results in the best light possible to attract investors. One segment of the drug industry is bucking that trend, using an accounting method that narrows its profit margins.
The three big middlemen for prescription drugs, known as pharmacy benefit managers, or PBMs, had operating-profit margins last year of 4 percent to 7 percent, a level that lags the 16 percent average among S&P 500 companies. Were they to tally their revenue the way many middlemen in other industries do, their margins would more than double.