PBM’s Take Fees of 31% on Generic Drugs

Ohio’s Pharmacy Benefit Managers (PBMs) charged the state a “spread” of more than 31 percent for generic drugs – nearly four times as much as the previously reported average spread across all drugs, according to a new report by Ohio Auditor of State Dave Yost…………….

Auditor’s Report: Pharmacy Benefit Managers Take Fees of 31% on Generic Drugs Worth $208M in One-Year Period

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Ohio’s Pharmacy Benefit Managers (PBMs) charged the state a “spread” of more than 31 percent for generic drugs – nearly four times as much as the previously reported average spread across all drugs, according to a new report by Ohio Auditor of State Dave Yost.

An analysis conducted by Auditor Yost’s staff found PBMs collected $208 million in fees on generic Medicaid prescriptions, or 31.4 percent of the $662.7 million paid by managed care plans on generics during the one-year period April 1, 2017 through March 31, 2018.

The Auditor’s review, conducted at the request of state lawmakers, largely confirmed the findings of a private consultant hired by the Ohio Department of Medicaid to examine the state’s system of managing its pharmacy plan. Specifically, lawmakers wanted to know how much PBMs are paid through the “spread” – which is the difference between what the state’s managed care plans pay the PBMs and what the PBMs pay pharmacies to dispense drugs.

Tyrone’s Commentary:

On the heels of terminating two large PBM contracts, the State Auditor of Ohio released this bombshell report detailing the financials which prompted terminating said contracts. Why do you think Chase Bank, Amazon and Berkshire Hathaway have taken matters into their own hands? Self-insured employers must first make sure all vendors and advisers interests are perfectly aligned to theirs. Second, get self-educated AND (not or) hire an expert with a proven track record whose interests too are perfectly aligned. I can assure you these qualifications makes the list of qualified candidates much smaller than you think. The bottom line – trailing public entities in how you manage pharmacy benefits is no longer sustainable.

“The more we learn, the more troubling this becomes,” Yost said. “Our review has answered many of the questions presented by state lawmakers, but the lack of information from the PBMs limits the depth of our work. Without more information – on what’s happened in the past and what is planned for the future – Ohioans will never know if they’re getting a fair price. They deserve an accurate accounting of this work.”

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