Kentucky PBMs took $123.5M in hidden fees, report claims

In 2018, pharmacy benefit managers for Kentucky's Medicaid program used a common pricing tactic to reap $123.5 million in hidden fees, according to a new state report cited by Bloomberg.

The report explores a controversial practice called spread pricing, where PBMs pay drugstores one price for a treatment while charging more to their health plan clients. Critics of the practice say the difference in pricing adds to PBMs profits.

The report found that Kentucky Medicaid insurers paid $957.7 million to the four PBMs that the state program works with. Of that amount, PBMs kept 13 percent of $123.5 million through using the pricing tactic.

The size of the spread has increased by more than a third since 2017.

Companies that run the PBMs in the state's Medicaid program, including CVS Health and Cigna, claim their clients knowingly enter into the spread-pricing agreements and that those agreements help fund benefits for patients and stabilize drug costs.  

Read the full report here.


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