Pharmacy benefit managers’ practices surrounded by secrecy

Pharmacy benefit managers play a significant role in determining prescription drug costs and even controlling which drugs an insurance plan will cover.
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Pharmacy benefit managers play a significant role in determining prescription drug costs and even controlling which drugs an insurance plan will cover.

Ted Strickland served as governor of Ohio from 2007 to 2011.

As reported in the Dispatch in early June, the Federal Trade Commission announced it would conduct a study on the contracting practices of pharmacy benefit managers.

Most Americans are blissfully unaware of the complicated intricacies that plague our healthcare system, which often increase the cost of critical care and reduce the availability of life-saving drugs. The commission study is an important step in the right direction.

More:FTC agrees to ‘shine a light’ on how drug middlemen impact your prescription prices

Pharmacy benefit managers were originally formed more than 50 years ago to process claims and negotiate with drug makers for lower prices. But as of today, they administer drug plans for hundreds of millions of people, most of whom have no idea they’re doing so, or even the fact they exist.

They’re essentially middlemen who operate in a shroud of secrecy, playing a significant role in determining prescription drug costs and even controlling which drugs an insurance plan will cover.

This lack of transparency is exacerbated by the fact that a staggering 80% of the prescription drug market is controlled by only three pharmacy benefit managers.

With such a small number of pharmacy benefit managers wielding such immense power, they have become a big factor in the increasing of cost for much-needed prescription medications in states across the country, including Ohio.

Ted Strickland served as governor of Ohio from 2007 to 2011.

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One particularly odious practice is referred to as “spread pricing.“When a PBM engages in spread pricing, they carry out the process of charging a health insurance plan to fill a prescription, but reimburse the pharmacy for less than they charge the insurance plan. The pharmacy benefit manager then pockets the difference.

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