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Kentucky AG investigating pharmacy benefit managers' drug pricing practices

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Kentucky AG investigating pharmacy benefit managers' drug pricing practices

Kentucky's Attorney General Andy Beshear is investigating allegations of pharmacy benefit managers overcharging the state health insurance programs for drugs and discriminating against independent pharmacies.

According to a March 21 press release, the investigation is exploring how pharmacy benefit managers, or PBMs, hired by state Medicaid managed-care organizations and the state employee health plan have "determined, billed and paid drug reimbursement rates over the past five years in Kentucky."

Beshear said the purpose of the probe was to "identify and recover any profits improperly retained at the expense of the Commonwealth and its taxpayers and ensure Kentucky families have affordable and accessible health care."

A report by the state in February showed that two PBMs made $123.5 million in 2018 from the state Medicaid program by paying pharmacies a decreased rate to fill prescriptions while charging the state more for the same drugs.

"PBMs were originally established to help companies and government programs better manage pharmacy costs, but have grown into powerful industry middlemen that go to great lengths to hide and complicate drug pricing information," Beshear added.

The press release stated that more than 1.5 million Kentuckians receive pharmacy benefits through Medicaid and the state employee health plan's PBMs, while thousands of other people in the state receive pharmacy benefits through PBMs retained by their private insurance plans.

Earlier in March, Ohio Attorney General Dave Yost filed charges against UnitedHealth Group Inc.'s unit OptumRx Inc., claiming that the company had overcharged the state about $16 million for drugs purchased by injured workers, who were insured under the Ohio Bureau of Workers' Compensation.

With criticism on high prices for prescription medicines on the rise, President Donald Trump's administration is proposing to eliminate the safe harbor protections that allow pharmacy benefit managers to secure lucrative rebates from biopharmaceutical companies under secret deals.

Health and Human Services Secretary Alex Azar is also promoting the administration's efforts to lower drug prices, which have become an important part of the fiscal 2020 budget plan.