A unifying principle in health care has emerged over the last decade, with patients and policymakers alike demanding greater price transparency. This way patients can become better consumers of care, and employers and government programs can better identify value in the types of care they ultimately pay for. New laws have been enacted requiring transparency for many parts of the system. Still one segment of the drug supply chain with enormous influence on prescription prices remains in the shadows: drug wholesalers.
Wholesalers are an essential part of the supply chain. They are the intermediaries that purchase drugs from manufacturers and sell and ship them to pharmacies. More than 7 billion prescriptions were dispensed at retail and long-term care pharmacies in 2025, and virtually all of them moved through a wholesaler. But they are not just shipping companies; they have a direct influence on what both patients and pharmacies pay for drugs. Yet very little, if anything, is known about the business practices of wholesalers due to the lack of transparency.
This is in contrast to other areas of health care where Congress and the Trump Administration have advanced transparency requirements. New data sharing rules are being enforced on hospitals and health insurers. Direct negotiations with drug companies are exposing the high prices manufacturers have long set for prescription drugs. And most significantly, the Consolidated Appropriations Act included wide-ranging transparency requirements for pharmacy benefit managers (PBMs).
But even with these changes, prescription drug prices will still be too high for Americans. And despite their position as a key player sitting at the center of nearly every transaction, drug wholesalers have largely escaped scrutiny.
Wholesalers: A Powerful Force in Drug Pricing
Wholesaler positioning in the middle of the supply chain means they exert significant influence over drug availability and pricing, especially generic drugs. Over 90% of the prescriptions filled in the U.S. every year are generic drugs, and wholesalers dominate nearly every aspect of their pricing between manufacturer and patient. Through bulk purchasing arrangements and incentivized drug lists, wholesalers can push independent pharmacies toward certain products.
We know that the more pharmacies purchase from those lists, the larger the discounts they receive, but there is much that we don’t know about these arrangements. Does the use of incentivized drug lists and other “push” strategies limit competition and artificially raise drug costs? Are independent pharmacies receiving the best rates from wholesaler-led negotiations?
Despite their outsized influence, wholesalers face concerningly few guardrails and have barely been explored by Congress. We know far too little about their impact on pharmacy competition and generic drug pricing, including the relationships among pharmacy services administrative organizations (PSAOs) and independent pharmacies.
Potential Conflicts of Interest Warrant Policymaker Scrutiny
PSAOs add to the mystery surrounding wholesalers. These organizations negotiate reimbursement rates on behalf of independent pharmacies, selling them the promise of larger scale delivering better reimbursement rates. The largest PSAOs are owned by the same wholesalers that sell drugs to those pharmacies. These relationships raise questions about whether pricing, purchasing, and reimbursement decisions are all being shaped by the same set of actors. Does wholesaler access to reimbursement rate information influence, and potentially increase, pharmacy purchase prices?
For independent pharmacies, wholesalers dominate nearly every aspect of generic drug transactions. Wholesalers sit on both sides of the table: They create “generic sourcing programs" of certain drugs they have purchased using their own buying groups, which they push independent pharmacies to buy under the promise of getting bigger discounts on those drugs. They also represent the independent pharmacies in negotiating the reimbursement rates received on those very same drugs. These sets of conflicting interests raise an even more serious question: Are there appropriate safeguards in place to prevent prohibited coordination between wholesaler-affiliated entities?
Healthy Collaboration Requires Transparency
Recently, the industry association representing PBMs brought these concerns directly to the Department of Justice Antitrust Division and the Federal Trade Commission, who are reviewing guidelines for how businesses collaborate. These agencies should take a closer look at an industry that is highly concentrated and whose combined revenue was nearly one trillion dollars last year. Business practices within this industry are opaque and regulators should ask critical questions about how the wholesaler market operates.
Reforms, coupled with significant industry innovations, have brought far-reaching transparency to PBMs and made progress in the hospital and insurer space, giving all of us greater insights into how dollars are being spent. But a truly transparent drug supply chain can’t leave a trillion-dollar blind spot while missing how money moves across the entire supply chain.
Wholesalers don’t just move products, they shape markets. If Congress is serious about lowering drug prices, it can’t afford to overlook the middle of the supply chain. It’s time to bring wholesalers into the conversation and understand how they drive up spending across the health care system.
Amanda Frost, PhD is Vice President, Research at Pharmaceutical Care Management Association (PCMA).
