Two border-hoppers hurriedly swim across the Rio Grande. Once ashore, one of them stumbles in the mud and turns to find he's tripped over a dental grill encased in a Lucite cube: Hank's souvenir from his encounter with Tuco.
At the White residence, Skyler tells Walt that the three-day hospital stay following his "fugue state" will cost an additional $13,000, and asks -- under the impression that Elliott and Gretchen Schwartz are paying for his treatment -- can cover this expense as well. Walt tells Skyler they will and promises to handle it. That night, Walt counts his drug money, realizing that after everything he's been through he has almost nothing. Later, Walt retches into the toilet and finds it clogged when he tries to flush. When he uses a plunger, a pack of Skyler's cigarettes floats to the surface.
The next day, Hank tells his boss, ASAC George Merkert, that so far no one has filled the power vacuum in the local drug trade caused by Tuco's death. However, DEA agents keep hearing the name "Heisenberg" on the street. Praising Hank for his abilities as an investigator, Merkert offers him a promotion to the Tri-State Border Interdiction Task Force in El Paso, Texas, which will require him to split his time between there and Albuquerque. On the elevator down to a congratulatory lunch, Hank suffers a panic attack and struggles to breathe.
At the repair yard, Clovis confronts Jesse over his theft of the RV. Jesse pays him for services rendered and for the damages to his fence and toilet, then makes a deal to stash the RV at the repair yard and buy a used 1986 Toyota Tercel. Searching for an apartment, Jesse finds a small duplex managed by a young woman named Jane Margolis. Jane asks Jesse to provide proof of employment and a former address to rent the vacant unit, but cuts him a break when he tells her about his parents kicking him out of his house. Jane raises the rent, though, and demands more money up front.
Meanwhile, Marie expresses dismay when she discovers Hank has called in sick the day after his promotion so he can brew "Schraderbräu" beer in his garage. While he's capping bottles of beer, one shatters and cuts his hand.
In the desert, Walt and Jesse cook meth and argue about their partnership. Walt wants Jesse to sell small quantities again to avoid dealing with another distributor like Tuco. Jesse protests, saying the DEA is onto him. Jesse asserts he has bills that need paying, which angers Walt because his monetary returns have already been sapped by his medical bills. Instead of going into business with "yet another homicidal lunatic" or selling small quantities, Jesse proposes a third option: they control production and distribution themselves. Jesse offers to bring guys in who can handle the street end of the business, but Walt is not comfortable bringing unknown entities into their operation. When Walt balks at being denied a say in the decision, Jesse chastises him for altering their original plan by getting Tuco involved. Realizing Jesse is right, Walt takes responsibility for the situation with Tuco and promises that will never happen again. Jesse tells Walt that they will be handling business his way from now on or he walks.
Setting out pretzels and soda in his new apartment, Jesse presents a business opportunity to Skinny Pete, Badger, and Combo. He'll front them each an ounce of meth at a time, and they in turn sell the product for $2,500, $2,000 of which goes to Jesse.
Walt's family visits Hank and Marie. Alone with her sister, Skyler demands she apologize — "now or never" — for stealing the baby tiara and nearly getting Skyler arrested. Marie resists at first, but tearfully apologizes when Skyler says she needs her sister back. Elsewhere, Walt listens as Hank regales Junior with the story of his confrontation with Tuco, comparing criminals to cockroaches. Meanwhile, Badger, Combo, and Skinny Pete sell Jesse's meth all over town. Everything goes fine until Skinny Pete is held up by a pair of junkies who make off with an ounce of meth.
Discussing the meth theft with Walt, Jesse argues that they need to accept a little "breakage" as the cost of doing business. Meanwhile, back at the White residence, Walt shows Skyler the crumpled cigarette package he retrieved from the toilet, and accusingly asks if she knows anything about it. Skyler later admits to having smoked three-and-a-half cigarettes before disposing of the pack and says that of course she feels ashamed. Walt says it's unlike her, but Skyler dismisses this, asking, "How would you know?".
That night, Hank and Marie are awakened to loud gunshot-like pops coming from inside the house. Gun drawn, Hank heads into the garage, visibly shaken, only to find that it's just the sound of his Schraderbräu bottles exploding due to pressure.
Walt shows up at Jesse's apartment, handing over the gun Jesse bought to defend himself against Tuco. Walt tells him to "handle" the meth thieves. Meanwhile, Hank stands on the bank of the Rio Grande, takes a deep breath, and heaves Tuco's grill into the water.
- The title of the episode comes from the conversation between Jesse and Walter, during which Jesse explains that Skinny Pete's incident was "Breakage." It is also a symbolism of Walter's change into a Tuco figure, insisting that revenge be taken, and his inevitable resemblance to Gus. Heisenberg has broken loose. It is also symbolism of Hank's mental breakdown from post traumatic stress disorder stemming from his shootout with Tuco, as well as Skyler's smoking problem.
- In the scene where Jesse discusses the new business arrangement with Skinny Pete, Badger and Combo there is a slight continuity error. Combo takes the cap off the soda and as the camera cuts to behind Combo the lid is back on the soda. It then cuts back to in front of him and the lid is off. Then the camera cuts again and we see Combo take the lid off again.
- Jesse tells his friends: "Apply yourselves!" Walter White wrote "Apply yourself!" on his high school chemistry test.
- The scene where Hank believes there is an intruder because of his exploding Schraderbrau bottles is reminiscent of the scene in "" where Walt believes there is an intruder because nobody is home, only to find Skyler taking a bath. Both of them nearly shoot their wives in self-defense.
- "Hook 'Em Horns" by Johnny Ringo (playing in Jesse's new car as he pulls up outside Jane's apartments)
- "Schraderbräu" by Dean Norris (as Hank) (Hank sings as he bottles his home brew, Schraderbräu, in his garage)
- "Lonesome Road" by Big Jack Johnson (with Kim Wilson and Pinetop Perkins) (in the background, outside at Hank and Marie's house)
- "Peanut Vendor" by Alvin "Red" Tyler (during the montage where Badger, Combo, and Skinny Pete sell the meth)
- Jane: "And in addition to first and last, I want two more months. D.B.A.A. fee, non-refundable."
- Jesse: "Yeah, of course. Non-refundable. D.B.A.A. Obviously. Yeah. Alright...so, uh...what's D.B.A.A?"
- Jane: "Don't Be An Asshole."
- ―Jane and Jesse.