A primer on brand-name prescription drug reimbursement in the United States.

Branded prescription drug reimbursement in the United States is complex and comprises multiple transactions among the parties involved in the drug supply chain, including manufacturers, wholesalers, pharmacies, health care providers, health plans or insurers, pharmacy benefit managers, and patients. This primer provides an overview of the parties involved in the reimbursement of brand-name drugs under both the pharmacy and medical benefits of an insurance policy and the flow of products and payments among them. Prescription drug spending in the United States grew from $30 billion in 1980 to $335 billion in 2018, and 80% of spending is on brand-name drugs.1,2 Pharmaceutical spending and drug prices have been the focus of intense debate in recent years, which has brought attention to the complexity of the drug supply chain. This primer provides a high-level overview of the distribution and reimbursement of brand-name drugs (italicized words are defined in the Glossary) used in the outpatient setting and covered by health plans or insurers in the United States. The focus is on the parties involved and the flow of products and payments among them. The purchase of drug products outside of insurance and differences in drug reimbursement between private and public insurers are outside of the scope of this primer.

Duke Scholars

Author Anna Hung Population Health Sciences