According to our analysis, for third-party payers, and consumers of prescription drugs under their coverage, intervention by hospitals, HMOs, and PBMs is unambiguously beneficial so long as these consumers are a random sample of the universe of prescription drug consumers. For then, current pricing practices in the pharmaceutical industry reduce drug prices, increase output, and lower drug companies' profits23in the hospital and managed care segment of the market. Consumers outside the hospital and managed care segment would not share these benefits, but neither would they suffer any loss. The prices they pay and the quantities they consume would not be affected by the discounts offered to
hospitals and managed care organizations.