Middle Men PBMs Are Raising Drug Prices, According to the Oregon State Pharmacy Association

Drug Prices: In a newly published report, the Oregon State Pharmacy Association (OSPA) discloses fresh information regarding the factors that are contributing to the rapid increase in the cost of prescription drugs in Oregon as well as the closure of dispensaries located around the state.

The research demonstrates how Pharmacy Benefit Managers (PBMs) are taking advantage of pharmacies while charging Medicare and Medicaid exorbitant costs; in one instance, the pharmacy was charged more than eight times the price that was originally offered.

Middle Men PBMs Are Raising Drug Prices

PBMs, or pharmacy benefit managers, are middlemen who sit between drug manufacturers and the health plans of patients. Their role was supposed to be to keep drug costs and accessibility under control, but instead, they are driving up the prices of prescription medications.

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The Oregon State Pharmacy Association (OSPA), in collaboration with 3 Axis Advisors, has published a report that details the alarming strategies that are being utilised by pharmacy benefit managers (PBMs), also known as intermediary health insurance companies, in order to increase profits at the expense of local pharmacies, taxpayers, and patients.

The report also illustrates the tactics that are being utilised by these PBMs. According to the findings of the research project titled “Understanding Pharmacy Reimbursement Trends in Oregon,” PBMs reimburse pharmacies at rates that are wildly variable, and Medicare and Medicaid can sometimes charge rates that are astronomically high.

Middle Men PBMs Are Raising Drug Prices
Middle Men PBMs Are Raising Drug Prices

One particularly troubling example detailed in the report shows that the state’s Medicaid programme, which provides health care to Oregon residents with low incomes, was forced to pay more than eight times the manufacturer’s asking price for a generic multiple sclerosis drug to pay.

This is a particularly troubling example because it shows that the state’s Medicaid programme should not be allowed to profit from the situation. If the payment were instead based on the list price of the manufacturer, which is now $350, rather than the average amount that PBMs charged Medicaid, which is $2,928, the state could save around $1.9 million on just that one medication.

Important Discoveries Made in the Report:

There are significant differences in reimbursement between the pharmacies included in the study and the broader Oregon retail pharmacy market. These differences are most pronounced in regions that are already at a disadvantage. PBMs that operate in each of the three distinct payer typesΒ  Medicaid, Medicare, and Commercial provide pharmacies with a variety of various incentives to participate in their programmes.

These programmes include: For instance, pharmacy benefit manager (PBM) payouts for the Oregon Medicaid Coordinated Care Organization programme were linked to the lowest margins for pharmacies. This created incentives that had the potential to force providers out of underprivileged neighbourhoods.

According to the findings of the study, the PBM reimbursement for the majority of applications (75 out of 100) dispensed at a typical Oregon retail pharmacy was insufficient to cover the drugstore’s labour and medication costs cover up when based on a sample size of 100 prescriptions.

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It would appear that the PBM incentives that are built into the existing system reward and encourage higher drug pricing in pharmacies. This results in higher prime costs for patients who obtain their medications through co-payments or who do not have any insurance coverage at all.

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