Most people think Big Pharma is the villain in healthcare.
They're wrong (partially).
Don't get me wrong- pharmaceutical companies aren't saints. But they're also not the only reason your insulin costs $300 instead of $30.
The real villains are hiding in plain sight.
One example is the Pharmacy Benefit Manager (PBM).
They've built the most profitable middleman business in human history by inserting themselves covertly between you and your medicine.
Here's how they did it- and how you can fight back.
The Middleman Mafia
Imagine if every time you bought coffee, seven different companies took a cut before it reached your cup.
The coffee farmer gets paid. Then a regional distributor takes 15%. Then a logistics company takes another 12%. Then a benefit manager takes 20%. Then a processing company takes 8%. Then a retail coordinator takes 10%. Finally, Starbucks takes their cut.
Your $2 coffee now costs $15.
This is exactly what's happening with your prescriptions.
Today’s guest, Rachel Strauss, who works in a transparent sector of the PBM industry, shared something that should make you furious:
"There are like seven or eight components or parties that are all part of the supply chain of getting that drug to you as the customer. And that is where all the margin is going."
Rachel emphasizes that it should be something like…
Manufacturer → Pharmacy → You.
But instead it's more like…
That graph hurts my head.
In other words maybe…
Manufacturer → Distributor → Wholesaler → PBM → Insurance → TPA → Retail Network → Pharmacy → You
Each middleman takes their cut. Each one adds complexity. Each one makes the system more expensive and less transparent.
The International Arbitrage Opportunity
Here's a fact that will make you question everything:
The same FDA-approved drugs available in Canada, Israel, the UK, and Australia cost 70-80% less than in the United States.
Same drug. Same factory. Same brands. Same safety standards.
The only difference? Other countries didn't allow a cartel of middlemen to capture their healthcare system.
Think about this:
* The US has 4% of the world's population
* Americans fund 75% of pharmaceutical companies' global profits
We're not sicker than everyone else… well maybe we are, BUT ALSO… we're getting scammed harder.
And here's the kicker that Rachel points out,
Personal importation of medications is currently legal and tariff-free in the US.
No one advertises it, but apparently you can legally order your prescriptions from ‘Tier 1’ countries (like Israel or Canada) - right now and save thousands of dollars.
The Rebate Lie
The most insidious part of this scam is something called "pharmaceutical rebates."
Here's how they're supposed to work:
Drug companies offer 30-60% discounts on medications to make them more affordable.
Here's how they actually work:
* You pay at the pharmacy
* Your employer gets a rebate 6-12 months later
* Nobody knows if the "discount" is real because there's zero transparency
* Big PBMs control the entire process and take a big cut (true for most Americans with ‘prescription coverage’)
It's like buying a car where the dealership gets the rebate instead of you, even though you paid full price.
The Vertical Integration Death Spiral
The real genius of this scam is vertical integration.
One company now owns:
* The pharmacy
* The insurance company
* The pharmacy benefit manager
* Increasingly even the doctor's practice
When you control every step of the supply chain, you can shift profits around to avoid regulation.
Here’s how that plays out…
If the government cracks down on insurance company profits? No problem—just make your money in the PBM division.
If PBM margins get regulated? Easy. Shift profits to the pharmacy side.
It's a shell game where patients always lose.
The Information War
The most powerful weapon in this scam is complexity.
They've made the system so complicated that most of the time:
* Pharmacists can't explain pricing
* Doctors don't know how much drugs cost
* Patients can't figure out how to comparison shop
* And regulators can't track the money - especially when rebates are handled offshore (as they often are)
When I ask my doctor about drug prices, he doesn’t know how much anything is.
When patients try to use GoodRx at independent pharmacies, they're told "we don't accept that." And even more interesting - BEHIND GoodRx is… you guessed it!
A PBM
When anyone asks for transparency, they're buried in 47-page documents full of technical jargon. And of course, that’s just the contract LANGUAGE to ‘define’ transparency.
It’s all garbage because complexity is the enemy of accountability.
Your Action Plan (Because Complaining Doesn't Pay Your Bills)
While we're waiting for the system to collapse under its own corruption, here's what you can do right now:
1. Become Price Literate
* Always ask your pharmacist for the cash price
* Don't accept "I don't know" as an answer about drug costs
* Download GoodRx (despite its flaws, it's a pricing reference)
2. Go Direct When Possible
* Many drug manufacturers offer direct-pay programs
* Research online and international pharmacy options
* Some independent pharmacies offer cash discount programs
3. Support System Disruptors
* Use independent pharmacies
* Support direct primary care doctors
* Look into peer-to-peer funding networks (like CrowdHealth)
* And if you are an employer mandated to work within the system - look into smaller, regional, boutique PBMs. (Because if it’s owned by private equity, Wall Street or a national pharmacy chain - it’s contributing to the problem)
4. Build Your Own Intelligence Network
* Join patient advocacy communities (like this one right here!)
* Follow healthcare transparency advocates on social media (like me 😉)
* Share pricing information and helpful resources with other patients & your clinical team
The Coming Disruption
This system is unsustainable.
Just like the financial services industry got exposed for 401k fee gouging 20 years ago, PBMs are about to face their reckoning.
The signs are everywhere:
* Media coverage is growing
* Patient advocacy groups are organizing
* Government investigations are increasing
* Technology is making price comparison easier
President Trump's executive order on “Most-Favored-Nation Prescription Drug Pricing” was just the beginning.
The next wave of reform will focus on transparency, vertical integration limits, and direct-to-consumer options.
The Bigger Picture
This isn't just about saving money on prescriptions.
This is about who controls your healthcare decisions.
Right now, a handful of companies control:
* How much you pay
* Where you can get them
* What drugs you can access
* Whether your local pharmacy survives
They've turned your health into their profit center.
But here's the thing about middleman businesses- they only exist as long as customers don't realize they can go direct.
The internet destroyed travel agents, stockbrokers, and music distributors.
Healthcare middlemen are next.
The Real Solution
The PBM industry provides some legitimate services- managing drug interactions, coordinating care, negotiating with manufacturers.
The question isn't whether these services are valuable. The question is whether they are the best ones to provide them and if they're worth $500 billion per year in fees.
What Comes Next
The pharmaceutical pricing crisis is a feature, not a bug.
It's designed to extract maximum profit from captive customers who literally need these products to stay alive.
But every monopoly eventually falls.
And this one is starting to crack.
The next few years will determine whether we build a healthcare system that serves patients or profits middlemen.
Choose your side carefully.
The revolution is coming, and it starts with you refusing to accept "that's just how the system works" as an answer.
The only way we change this is by spreading awareness faster than middlemen can spread confusion.
Your move.
Quick note! CrowdHealth is our amazing sponsor (seriously amazing) and since we spent time with the team in Vegas last week, I’m even more pumped about watching them grow.
Devin Ryder and I have been members for 18 months now and we’ve never been happier with our healthcare.
If you are ready to take control of your health and experience freedom from health insurance (and PBMs) you should join us- we’re a cool, obstinate, happy group.
Use code “Liberty Lab” for $99/month for the first 3 months. If you ever have questions about it - DM me personally or comment below!
Rachel Strauss - we appreciate you!
If you want to learn more about health policy and the prescription drug market follow Rachel on Substack, Linkedin and TikTok!
Until next week!
Tiffany
*Never legal, financial or medical advice! Ciao!
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit thehealthcarelibertylab.substack.com