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PBMs and spread pricing When a middleman is paid one amount for a drug, but then reimburses a pharmacy a smaller amount, the difference is called a price spread. That's what is happening in taxpayer-funded Ohio’s Medicaid prescription drug program, where the middleman is a little-known entity called a pharmacy benefit manager, which is hired by a managed-care organization. Here’s how it works: If Medicaid gives

a PBM $10 for Drug ABC, and the PBM gives a pharmacy only $8 for Drug ABC, that’s a $2 price spread, or 25 percent. The Dispatch analysis of 2017 data included: • 40 pharmacies of various types and locales • 200,000 drug transactions • 13 million drug units The analysis found: • A price spread of $1.5 million between what the state Medicaid program paid pharmacy benefit managers for

prescription drugs and what those PBMs paid pharmacies to get those same prescription drugs. • That price spread indicates the PBMs were simply keeping roughly 10% of the money the state gave them to obtain drugs. If that percentage can be extrapolated to include all Medicaid-funded drug purchases, it would show the PBMs are receiving millions of dollars from taxpayers every year.

Examples of what PBMs get from 1 drug dosage from 1 pharmacy Drug:

Who sold: Medicaid paid PBM: PBM paid pharmacy: PBM price spread: Net revenue for PBM:

Vyvanse (Lisdexamfetamine Dimesylate), treats ADHD, 30 mg capsule Drug store in small county seat $8.64 a unit 67 cents a unit $7.97 a unit $240

Quetiapine Fumarate, treats schizophrenia, 50 mg tablet Large suburban pharmacy $3.24 a unit 66 cents a unit $2.58 a unit $390

Budesonide, treats Crohn's disease, 3 mg capsule Large hospital group $10.69 a unit $4.85 a unit $5.84 a unit $530

Raloxifene Hydrochloride, treats osteoporosis, 60 mg tablet Mid-sized exurban pharmacy $3.19 a unit 62 cents a unit $2.57 a unit $80

Sources: Dispatch analysis of national drug utilization database and data from Ohio pharmacies

Aripiprazole, anti-psychotic, 10 mg pill Medium-sized pharmacy group $5.80 a unit 30 cents a unit $5.50 a unit $10,445

GATEHOUSE MEDIA

PBMs and spread pricing  
PBMs and spread pricing  
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