Despite the political noise around slashing drug prices, structural realities in the US generics market make significant cuts unlikely. Generic buyers are highly consolidated and already command deep discounts, while most drug variants face intense manufacturer competition. Over 90% of generic versions have at least two manufacturers, more than 60% have four or more, and about 10% have ten or more—leaving little room for additional pricing pressure from competition. Meanwhile, just three buyers control more than 80–90% of generic purchases, meaning any further savings would require outright price controls—an unlikely move.
Moreover, with 40–50% of generics imported, aggressive price cuts could make exports unviable for supplier and trigger a supply shock instead, a risk the US administration would like to take.
Here’s a breakdown of how concentrated the US generic purchasing landscape really is.
1. Pharmaceutical Wholesalers
Approximately 92% of prescription drugs in the United States are distributed through wholesalers. The three dominant wholesalers—Cencora (formerly AmerisourceBergen), Cardinal Health, and McKesson Corporation—account for over 90% of wholesale drug distribution in the country. These wholesalers purchase drugs from manufacturers and supply them to various healthcare providers, including pharmacies, hospitals, and clinics.
2. Pharmacy Benefit Managers (PBMs)
These companies manage drug plans for insurers, employers, and government programs, and they have huge leverage in negotiating prices for prescription drugs. Thus, while PBMs don't "buy" in the traditional sense, they direct the vast majority of generic drug dispensing and reimbursement. They negotiate with drug manufacturers and pharmacies to control drug spending and determine the list of covered medications. The three largest PBMs—CVS Caremark, Express Scripts (a Cigna company), and OptumRx (a UnitedHealth Group subsidiary)—collectively manage pharmacy benefits for approximately 275 million Americans, covering about 80% of the market.
3. Retail Pharmacy Chains
Major retail pharmacy chains such as Walgreens, CVS Pharmacy, Kroger, and Albertsons are significant purchasers of generic drugs. These chains often engage in direct purchasing agreements or participate in group purchasing organizations to obtain favourable pricing on generics. For instance, Red Oak Sourcing is a joint venture between CVS Health and Cardinal Health, established to source generic drugs more efficiently. Other notable buyers include Walgreens Boots Alliance Development (WBAD) and McKesson’s ClarusOne venture with Walmart.
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