Amazon, Chase, and Berkshire Hathaway partner up to fight health care costs

Amazon has joined forces with Warren Buffett's Berkshire Hathaway and JPMorgan Chase in a bid to slash health care costs for their 1.1 million employees.

Together, the three partners will combine resources to create an independent company that will initially focus on "technology solutions" to provide "high quality and transparent health care at a reasonable cost."

The news had an immediate impact on the market, with shares in CVS and UnitedHealth dropping 7 percent in premarket trading. Pharmacy benefit manager Express Scripts fell nearly 5 percent and Aetna was down nearly 4 percent, CNBC reported.

"The ballooning costs of health care act as a hungry tapeworm on the American economy," said Buffett in a joint statement announcing the partnership. "We share the belief that putting our collective resources behind the country's best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes."

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Salaries of employees at 25 top tech companies
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Salaries of employees at 25 top tech companies

Google

Average annual bonus: $32,478

Average sign-on bonus: $27,547

Average annual base salary: $136,000

Netflix

Average annual bonus: $0

Average sign-on bonus: $3,520

Average annual base salary: $206,000

Twitter

Average annual bonus: $120

Average sign-on bonus: $26,144

Average annual base salary: $149,000

Apple

Average annual bonus: $20,298

Average sign-on bonus: $27,201

Average annual base salary: $102,000

Facebook

Average annual bonus: $33,225

Average sign-on bonus: $45,708

Average annual base salary: $145,000

Oculus VR

Average annual bonus: $395

Average sign-on bonus: $6,926

Average annual base salary: $119,000

Amazon

Average annual bonus: $24,732

Average sign-on bonus: $41,340

Average annual base salary: $118,000

Square

Average annual bonus: $988

Average sign-on bonus: $17,996

Average annual base salary: $134,000

Uber

Average annual bonus: $31,633

Average sign-on bonus: $1,807

Average annual base salary: $117,000

Pinterest 

Average annual bonus: $4,374

Average sign-on bonus: $33,376

Average annual base salary: $151,000

Tesla

Average annual bonus: $4,779

Average sign-on bonus: $19,447

Average annual base salary: $105,000

UnitedHealth Group

Average annual bonus: $7,280

Average sign-on bonus: $118

Average annual base salary: $87,000

Snap Inc.

Average annual bonus: $10,588

Average sign-on bonus: $23,705

Average annual base salary: $127,000

Hewlett Packard Enterprise Co.

Average annual bonus: $10,756

Average sign-on bonus: $8,265

Average annual base salary: $131,000

CSRA

Average annual bonus: $13,732

Average sign-on bonus: $1,186

Average annual base salary: $100,000

credit: Facebook

Capital One

Average annual bonus: $15,114

Average sign-on bonus: $8,568

Average annual base salary: $107,000

Fitbit

Average annual bonus: $18,069

Average sign-on bonus: $25,459

Average annual base salary: $128,000

Pandora

Average annual bonus: $22,316

Average sign-on bonus: $18,886

Average annual base salary: $109,000

Microsoft 

Average annual bonus: $23,224

Average sign-on bonus: $20,191

Average annual base salary: $179,000

Airbnb

Average annual bonus: $23,250

Average sign-on bonus: $23,250

Average annual base salary: $124,000

Arista Networks

Average annual bonus: $27,497

Average sign-on bonus: $18,652

Average annual base salary: $151,000

credit: Facebook

Linkedin

Average annual bonus: $32,216

Average sign-on bonus: $25,418

Average annual base salary: $149,000

Dropbox

Average annual bonus: $32,707

Average sign-on bonus: $32,833

Average annual base salary: $144,000

VMware

Average annual bonus: $33,145

Average sign-on bonus: $18,851

Average annual base salary: $147,000

Salesforce

Average annual bonus: $39,959

Average sign-on bonus: $28,314

Average annual base salary: $142,000

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"Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans," said Jamie Dimon, Chairman and CEO of JPMorgan Chase.

The soaring price of healthcare has drawn a new light on an interconnected machine of players that comprise the U.S. healthcare system. Before a drug reaches a patient, it effectively passes through the control of the drug maker, an insurer, a PBM, a wholesale distributor, and a pharmacist, with each taking a cut along the way. Most patients never see the real cost of a drug and have grown accustomed to paying a nominal $30 or so co-pay for many prescriptions.

But as health plans have rejiggered to control costs, more patients have gotten exposed to paying full "list price" at the pharmacy counter, which can run into the hundreds of dollars. That has patients, parents, and politicians up in arms. After the emergency anti-allergic reaction drug EpiPen raised its list prices to $600, as reported by NBC News, angry families stormed social media and contacted their representatives. The drugmaker, Mylan, ended up answering questions on Capitol Hill and was fined by the DOJ for overcharging Medicare.

During that controversy the company's CEO drew a new bead on one of the cogs in the healthcare system, the pharmacy benefits manager, suggesting they were to blame for most of the markup. PBMs negotiate prices between insurers and drugmakers and apply cost-saving techniques to the "formulary" of approved drugs.

Insurers and PBMs are frequently involved in contentious lawsuits with one another over pricing and profit, all adding to the pressure for new ways to reduce the cost of healthcare.

"Hard as it might be, reducing health care's burden on the economy while improving outcomes for employees and their families would be worth the effort," said Amazon founder and CEO Jeff Bezos.

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