PBMs collect money from insurers to reimburse pharmacies for the drugs they dispense to patients. But PBMs don’t have to tell insurers what those drugs cost or how much they’re passing along to pharmacies. And pharmacies have no idea how much the PBMs are collecting from insurers. PBMs continue to reduce the amount they’re reimbursing pharmacies for dispensing the drugs, without passing along any savings to insurers. In New York, the biggest insurer is the state’s Medicaid program, and the money it sends to PBMs comes from taxpayers. Between 2017 and 2018, New York Medicaid PBMs were able to overcharge taxpayers by 24% by cutting pharmacy reimbursements 83%.

And it’s not just New York taxpayers who are getting ripped off. In Ohio, a series of investigative news stories in the Columbus Dispatch prompted a state audit, which found that PBMs overcharged taxpayers by more than $200 million between April 1, 2017 and March 31, 2018.

[13 Axis Advisors. (2019). Analysis of PBM Spread Pricing in New York Medicaid Managed Care. Bellbrook, OH]