- The federal government wants Medicaid managed care plans to exclude any excess money retained by pharmacy benefit management companies using spread pricing from the actual cost of claims used to calculate a plan's medical loss ratio. This means PBMs will have to disclose spread pricing to Medicaid managed care plans, ensuring better accounting of spread pricing and accurate reporting of a plan's medical loss ratio.
- CMS is concerned spread pricing is inflating the costs of drugs and increasing costs for taxpayers. The proposed rule, released Thursday, would limit spread pricing's influence on a plan's medical loss ratio.
- The National Community Pharmacists Association applauded the proposed rule. "For years, community pharmacists have said that PBMs have been playing spread pricing games, contributing to higher drug costs to the detriment of states they are supposed to serve," NCPA CEO and pharmacist B. Douglas Hoey said in a statement.
The proposed rule follows reports from states such as Ohio where officials found PBMs raked in millions by charging pharmacists one price and the health plan — in this case, the state — a higher price for the same drug.
In the case of Ohio, the PBMs billed the state nearly 9% more than what they paid pharmacists in 2018, representing an upcharge of nearly $224 million in just one year, according to the Columbus Dispatch.
CMS Administrator Seema Verma commended some states for taking on this issue.
"States are increasingly reporting instances of spread pricing in Medicaid, including cases in Ohio and Texas, and I am concerned that spread pricing is inflating prescription drug costs that are borne by beneficiaries and by taxpayers," Verma said in a statement.
NCPA said it's critical to monitor and account for spread pricing so states and plans know what they are paying for. But PBMs have previously defended the practice, saying it can add predictability by eliminating prices varying from pharmacy to pharmacy.
Curbing drug costs has been a top priority for the Trump administration.
Most recently, HHS proposed to eliminate drug rebates and move any discounts directly to the point of sale, which would be of greater benefit to Medicare and Medicaid beneficiaries, the department said. This proposed rule on spread pricing would not conflict with the already proposed rebate rule, CMS said.