Stop Pharmacy Benefit Managers from fleecing Kentuckians


By Mark Glasper

Thanks to new federal and state laws, including Rep. Michael Meredith’s House Bill 463 from 2018, your pharmacist can finally inform you when the real price of your medicine is less than the co-payment charged by your insurer. This much needed transparency means consumers will finally be aware of something that happens far more often than they know.

But this is only the tip of the iceberg when it comes to helping Kentuckians save money on the medicines they need. Real cost savings will come when we limit what the nefarious middlemen of the healthcare industry collect without your knowledge.

Nefarious Middlemen

I’m talking about the Pharmacy Benefit Managers (PBMs) which dictate how you get your medications and how much you pay. While they used to operate in the shadows, the curtains are thankfully being pulled back. And taxpayers in Kentucky should pay attention to what they see.

A few giant PBMs hide the actual costs of medicines by charging the state’s managed Medicaid health plans more than what they reimburse pharmacists. Known as spread pricing, this practice creates a dramatic and unnecessary increase in costs for all taxpayers.

The spread is the difference in the amount the PBM charges the state’s Medicaid program versus what they reimburse the pharmacy for certain prescription drugs. This game is most commonly seen with generic medicines, which are by far the most prescribed.

For example, take the generic version of the commonly prescribed Nexium known as esomeprazole. According to the Centers for Medicaid Services (CMS), PBMs charge Kentucky Medicaid $5.46 per pill, but an average of what they likely reimburse the pharmacist is $0.49 per pill. That difference of $4.97 per pill or $162.48 per prescription is kept by the PBM, while offering no additional benefit to the patient or the healthcare system.

And this is just one glaring example. The state of Ohio recently commissioned a report on this predatory practice and found PBMs had billed taxpayers nearly $225 million more in a year than what they paid pharmacists for filling Medicaid patients’ prescriptions.

Profits Before Patients

Here in Kentucky, we’re all billed far more than the actual cost of medicines while our pharmacies are paid very little for dispensing them. This is another example of PBMs putting profits before patients, often forcing Kentuckians to choose between keeping the lights on and paying for their medicine.

Fortunately, we can do something about it by increasing transparency and accountability. We must prohibit PBMs from charging insurers more than the actual cost of medications and services. We must also require that PBMs report rebates, administrative fees or any other revenue collected from pharmaceutical companies, along with the percentage they retain. Finally, we must require regular financial audits of PBMs to hold them accountable for patients and taxpayers.

Forget the rhetoric from PBMs. Look at the data which tells the real story of how they are fleecing patients, pharmacists and taxpayers. Look at the stories from Ohio where legislators and media shined a bright light on the PBMs and fought for consumers. Don’t be fooled into thinking that the mighty Ohio River stops PBMs from doing the same things in Kentucky.

-Mark Glasper is executive director of the Kentucky Pharmacists Association.