Pennsylvania’s Auditor General takes on prescription drug “middlemen” in new report

Pennsylvania’s Auditor General takes on prescription drug “middlemen” in new report

Author: Stephany Dugan/Tuesday, December 11, 2018/Categories: News and Views

Auditor General Eugene DePasquale today released a special report on the role of the “middlemen” between pharmaceutical companies, insurance providers and pharmacists who fill customers’ prescriptions.

Standing in front of the pharmacy counter at an independent retailer in Lancaster County, DePasquale cited his report that shows the state’s Medicaid program paid $2.8 billion in 2017 to PBMs, which is a 100 percent increase since 2013.

Saying it’s a fair question, DePasquale begged, “What did Pennsylvania taxpayers get for that increase?”

Echoing the auditor general, Rep. Seth Grove (R-York), who stood alongside him said, “We don’t know how or where our taxpayers’ dollars are being spent within the PBM system.”

Grove added he looks forward to helping advance all of the recommendations that can be achieved by enacting legislation at the state level.

“I know it’s going to be a great starting point for the legislature to gather around these recommendations,” said Grove.

Pharmacy benefit managers are tasked with, among others, negotiating the lowest possible net price from drug manufacturers.

The role of the pharmacy benefit managers is mostly out of sight to the general public. DePasquale said resulting in little transparency, a lack of government oversight and can put mom-and-pop pharmacies at a competitive disadvantage.

President of the Pharmaceutical Care Management Association JC Scott disagrees. In a statement, he called the report “highly biased” towards independent drugstores.

“The report omits any mention of how PBMs are reducing prescription drugs costs and increasing access to needed medications for Pennsylvania’s Medicaid beneficiaries,” said Scott.

The largest managers in the country, which act as subcontractors, include CVS Caremark, Express Scripts and OptumRx, all of which have come under the microscope of other states as well, including Ohio. A report released last week in Ohio found that pharmacy benefit managers retained over $223 million last year of the money they billed Medicaid.

In Pennsylvania, neither the auditor general or the state Department of Human Services have oversight over these contracts or business practices currently, which DePasquale said ‘had to change’.

Among the 10 recommendations DePasquale suggests is, passing legislation that increases transparency into pharmacy benefit managers’ pricing practices and granting state oversight of contracts signed between managers and pharmacies.

DePasquale is planning to release an additional report on the pharmacy benefit manager rebate process within the first quarter of 2019.

Stephany Dugan a staff writer for The PLS Reporter. Have a question, comment or tip? Email her at