Praxsyn Corp (PXYN)

[Drugdoctor]

In the Pharmaceutical Business, many companies bill an insurance company with a usual and customary charge, which they know they will not collect... For example... Let's suppose a drug wholesales for 100 dollars...., the selling company may bill the insurance company for 140 dollars, which is wholesale x 40% markup, knowing that they will not collect that amount... What they may expect to collect could be like wholesale cost - 10% + a 10% fee, which would be 100 dollars, - 10 dollars = 90 dollars + 10% is $9, so they bill for $140 dollars, knowing they will only get paid $99 dollars...

In reality, the selling company may have bought the drug at a discount anyway, and paid only $80 for it, so they end up making a 19% gross margin on the sale...

In compounding, the gross margins may actually be a little higher than my example of a brand name drug above, but you get the picture. What is billed and what is actually paid are ALWAYS two different prices, and it has been that way for over 30 years...

Hope this was helpful for some...