CHICAGO, ILLINOIS (March 13, 2019) — As Ohio, Kentucky, New York, and states across the country discover pharmacy benefit manager (PBM) misuse, a new report shows that PBM spread-pricing in the Illinois Medicaid program has generated no savings for the state or patients since switching to a managed-care model last April.
“Based on what we’ve seen happening in other states, we believe PBM middlemen could be costing the state hundreds of millions or more in spread pricing,” said Monique Whitney, executive director of Pharmacists United for Truth and Transparency. “These findings have huge implications for Illinois taxpayers who are being ripped off by the built-in-complexities and backroom deals that PBMs use to make themselves look like they are saving the state money.”
The comprehensive independent analysis, done by 3 Axis Advisors and commissioned by the Illinois Pharmacists Association, finds that the state’s expansion of Medicaid managed-care is not only costing the state millions, but it also provides an opportunity for PBMs, the third-party administrators that manage prescription-drug benefits programs, to profit at the expense of patients and pharmacists.
The report details just how PBMs profit from spread-pricing — the difference between what the PBM charges a patient or insurance and what the PBM pays the pharmacy. Despite the pressure put on pharmacies to provide greater reimbursements, the analysis finds that switching to a managed care model did not correspond to any state savings — a gap that can likely be attributed to pricing spread.
The report also highlights the damaging effects that PBMs have on state pharmacies, 15 of which have closed since Illinois switched to a managed-care model.
Among the key findings:
- Illinois paid an estimated $3.82 per prescription above pharmacy acquisition cost for generic drugs due to a PBM pricing-spread that accounted for 23 percent of overall generic costs.
- Following the Medicaid managed-care expansion, average pharmacy-margins fell from over $6 per prescription to less than $2 per prescription.
- Pharmacies lost money on 26% of claims because they have been forced to subsidize Medicaid, accept reimbursements that do not cover drug-acquisition costs, and pay a dispensing-fee out of compliance with federal-government requirements.
“This blatant PBM profiteering is part of a disturbing national trend that, among other devastating consequences, is causing 100 pharmacies a month nationally to shut down, impacting access to medication for patients across the country,” said Whitney.
The report concludes by calling for the state to conduct a full audit to asses cost savings and investigate PBM pricing spread. The full report can be found here.
About Pharmacists United for Truth and Transparency
Pharmacists United for Truth and Transparency (PUTT) exists to unify, promote, and preserve independent pharmacies through education and access; to monitor PBM and other industry practices which, when identified as abusive, are exposed in various manners in the interest of improving the quality, safety, and cost of patient care. For more information about the negative impact of Pharmacy Benefits Management company practices on the cost and accessibility of medications, or to learn more about PUTT, visit TruthRx.org or contact Monique Whitney, (505) 480-4150.
