Does it make sense to run a $3 generic prescription through the full insurance apparatus?
Consider the math. When a PBM is in the mix, the PBM captures $41 of every $100 spent on generic drugs; drugs that cost, on average, about 47 cents to manufacture. That makes the administrative layer the single most expensive component of the transaction.
Why? Insurance is built for risk pooling—spreading large, unpredictable expenses (a house fire, a hospitalization) across many people. But when the expense is a $5 medication, the cost of administering the risk pool can exceed the cost of the drug itself.
Most cheap generics are effectively a patient-paid benefit anyway. For patients with high deductibles, the insurance layer often isn’t paying anything, it’s just adjudicating.
The lesson isn’t that intermediaries are bad actors. It’s that every structure has consequences, and matching the tool to the job matters.
