How retail pharmacies are driving down generic drug prices: 3 things to know

Major retail pharmacies are achieving lower generic drug prices via drug-buying partnerships with drug distributors and pharmacy benefit manufacturers, reports Reuters.

Here are three things to know.

1. Most pharmacy chains have engaged in these contracts for several years. Walgreen's Boots Alliance initiated a drug-purchasing partnership with AmerisourceBergen in 2013 and entered a new agreement with Express Scripts earlier this year. CVS Health Corp. collaborated with Cardinal Health, and Walmart teamed up with McKesson Corp. for generic drug sourcing.

2. These partnerships are now giving pharmacies greater leverage for generic drug purchases, which is accelerating a drop in prices, according to industry analysts.

"There's no question those guys are getting much better pricing and really squeezing the manufacturers on margins," Gabelli & Co. portfolio manager Jeff Jonas told Reuters. "It's going to be a tough space for some time ... they are just going to keep playing the manufacturers off against each other."

3. Cardinal Health and AmerisourceBergen Corp. last week estimated generic drug prices will decrease as much as 9 percent through the end of the year, according to the report. Many generic drugmakers and distributors' stock fell last Tuesday following the estimate. Teva's stock fell 24 percent, Mylan's dropped 6 percent, and AmerisourceBergen and Cardinal Health's stock both fell 10 percent.

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