In Kentucky, PBMs Pocketed $123.5M In Hidden Fees From Plans That Cover The State’s Poor
The tactic the PBMs used are called spread pricing, which refers to the fees these companies pay pharmacies and then bill back to state Medicaid programs. The practice has gained attention among a growing number of states that are struggling to contain the cost of prescription drugs. In other pharmaceutical news, the Chamber of Commerce is launching ads against President Donald Trump's plan to tie U.S. prices for drugs to what other countries pay.
Kentucky Finds PBMs Are Benefiting From A Lucrative Profit Center
As the debate over prescription drug costs intensifies, Kentucky officials have released a report showing pharmacy benefit managers kept a widening share of money collected on behalf of the state Medicaid program. The report recommends several steps for overhauling relationships with these controversial pharmaceutical middlemen. Specifically, PBMs appear to have profited from what is known as spread pricing, which refers to the fees these companies pay pharmacies and then bill back to state Medicaid programs. Last year, PBMs were paid $858 million, of which they kept $123.5 million, or 13 percent. This was up from 9.4 percent in 2017, according to the report by the Kentucky Cabinet for Health and Family Services. (Silverman, 2/21)
Drug Middlemen Took $123.5 Million In Hidden Fees, State Claims
In 2018, four Kentucky insurers in Medicaid paid $957.7 million to four PBMs that use the arrangements. Of that, the PBMs kept 13 percent -- $123.5 million -- through spread pricing, according to the Kentucky report. Those size of the spreads rose by more than a third from 2017, the state found. “These are taxpayer dollars that we can’t identify what is the service they are being used for,” said Jessin Joseph, director of pharmacy for Kentucky’s Department for Medicaid Services, in a phone interview. Joseph said the state planned to do a more detailed claim-by-claim analysis of pharmacy spending to determine why spreads were going up. (Langreth, 2/21)
Chamber Launches Ad Blitz Against Trump Drug-Pricing Proposal
The Chamber of Commerce is launching a seven-figure ad campaign targeting a proposal from the Trump administration aimed at bringing down drug prices. The proposal, which is fiercely opposed by the pharmaceutical industry and other groups, would link what Medicare pays for prescription drugs to what other countries pay. (Hellmann, 2/21)