Tell me where Claude and I got this wrong The U.S. doesn't have a drug problem—it has a $360B+ middleman rebate…

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Summary

The U.S. drug pricing system is bloated by $360B in PBM middleman fees and rebates. The proposal replaces this with an open formulary, transparent cost-plus pricing, and inflation guardrails, cutting total drug spending by 35% while keeping pharma revenue whole, eliminating $262B in waste, and freeing up $142B annually in savings to fund patient subsidies.

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#1
Tell me where Claude and I got this wrong The U.S. doesn't have a drug problem—it has a $360B+ middleman rebate problem. List prices are inflated just to fund PBM spreads, fees, and retrospective rebates. A blueprint to fix it: An Open Federal Formulary + Transparent Cost-Plus Pricing 🧵👇
#2
Tweet 2: The Policy Framework Congress enacts four simple pillars: 1. Open Federal Formulary: 100% inclusion of all FDA-approved drugs. Zero PBM gatekeeping or non-medical switching. Doctors & patients decide. 2. Pricing Autonomy: Pharma sets its wholesale price; distributors set their margins. 3. Inflation Guardrail: Price hikes exceeding CPI-U face a 100% tax penalty. 4. Flexible Patient Credits: Benes get direct credits for premiums OR deductibles.
#3
Tweet 3: The Flow of Funds Math Using standard reference margins (6% Wholesale / 18% Pharmacy): 1. Pharma Net Yield: $390.00B (Pharma stays 100% whole) 2. Wholesaler (6% Markup): +$23.40B ↳ Pharmacy Buys at: $413.40B 3. Pharmacy (18% Markup): +$74.41B ↳ Final National Drug Spend: $487.81B
#4
Tweet 4: Legacy Model vs. Open Net Model The macro shift: • Gross Invoiced Spend: $750B ➔ $487.8B (−$262.2B / −35%) • PBM Retained Spread & Fees: $360B ➔ $0 (Eliminated) • Pharma Revenue: $390B ➔ $390B (Stays whole) • Wholesaler Margin: $15B ➔ $23.4B (+$8.4B) • Pharmacy Margin: $12B ➔ $74.4B (+$62.4B, clawback-free) Direct Drug Spend Savings: $122.2 Billion/year.
#5
Tweet 5: Overhead & Admin Savings On top of direct drug savings, transparent pricing eliminates the back-office waste: • Doctors: No more prior authorization paperwork or "fail first" appeals. • Pharmacies: Zero DIR clawback reconciliation or PBM audit defense. • Pharma & Employers: Eliminates gross-to-net accounting & PBM litigation. Additional Admin Savings: ~$20 Billion/year.
#6
Tweet 6: 340B Hospitals & Safety-Net Impact Because 340B statutory ceiling prices are pegged to manufacturer net base price: • 340B hospitals save $20B–$30B annually in upfront drug acquisition costs. • Drastically reduces the working capital needed to stock oncology & specialty meds. • Community health centers can directly pass cheap meds to uninsured patients without complex contract pharmacy arbitrage.
#7
Tweet 7: Funding the Flexible Patient Credit Total National Savings: ~$142.2 Billion / year ($122.2B drug savings + $20B admin). • Cost of Expired Enhanced ACA Subsidies: ~$35 Billion/year. • The Proposal: Allocate that full $35B into a Flexible Patient Credit for premiums OR deductibles. The Surplus: Savings beat the credit cost by 4 to 1, leaving $107B+ in net annual savings across taxpayers and employers.
#8
Tweet 8: Summary / Takeaway Who wins? ✅ Patients: 35%+ drop in out-of-pocket costs + flexible credit relief. ✅ Doctors: Full prescribing autonomy. ✅ Pharmacies: $74.4B margin with zero clawbacks. ✅ Employers: Lower premiums & transparent costs. 🚫 Losers: Monopoly PBM middlemen.
#9
Hey @grok , summarize the above as simply as possible for the non Health Care geeks