On Tuesday, August 14, 2018, the state of Ohio decided to end its pharmacy middlemen contracts over ‘spread pricing’. Ohio's new contract, with their PBMs, requires that they reimburse the pharmacies the same amount they collect from their plans. Thus the PBMs will no longer be able to utilize "spread pricing to pad their corporate profits. Shareholders would never stand for this.
It's important to note that, by definition, PBMs DO NOT Purchase Drugs! Therefore, if they are forbidden, by contract, to utilize spread pricing in their reimbursement then they stand to lose a major source of revenue.
How can the PBMs make up for all the lost revenue?
Critics provide a simple explanation: New restrictions by the state Medicaid department starting Jan. 1, 2019 spurred pharmacy benefit managers (PBMs) to find a new way to make money. And specialty drugs were the ticket. As noted above, specialty drugs were the ticket to increase revenue! When it comes to specialty drugs, there’s a catch: PBMs often guide purchases to pharmacies run by the PBMs’ parent company. Thus, when the price Medicaid must pay for specialty drugs increases, so does revenue flowing to the PBM companies’ coffers.
If million member Tax payer funded medicaid and medicare plans are being targeted by PBMs then smaller self-insured employer plans are even more vulnerable to this abuse.