Under the leadership of Centers for Medicare and Medicaid Services Administrator Seema Verma, the Trump administration recently released key guidance mitigating pharmacy benefit managers’ abusive “spread pricing” practices in state Medicaid-managed care programs.
This involves PBMs paying pharmacies, including independent long-term care pharmacies, substantially less than they receive from state Medicaid programs to administer prescription drug benefits. PBMs then pocket the difference.
Initially prompted by Senate Finance Committee Chairman Charles Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) seeking more information from the Department of Health and Human Services Inspector General on Medicaid spread pricing, a growing number of states have investigated the scheme. Kentucky, Ohio, Pennsylvania and New York are among the growing number of states to complete such analyses. Across the board, they’ve concluded that by employing spread pricing tactics, PBMs and Medicaid Managed Care Organizations are overcharging state governments and paying pharmacies inadequately.
CMS and key federal lawmakers have acted decisively in a bipartisan, thoughtful manner to curtail this wanton abuse of taxpayers, in general, and low-income consumers, in particular. It is now time to direct scrutiny at the Medicare side of the spread pricing ledger.