John and Jane both use the statin drug Crestor, which is marketed by AstraZeneca (AZ). Both obtain the drug from the same Walgreens pharmacy. John is enrolled in a small HMO; Jane has no insurance and pays for AZ on her own. (15 pts)
Pricing of drugs like Crestor is complicated by a system of warehousing and rebates, but at the end of the day, AZ makes less money from John’s prescription than from Jane’s prescription. Why is it that a small HMO can secure for John a better deal on Crestor than Walgreens is able to secure for Jane?