Pharmacy-benefit managers charge hefty markups on generic drugs: pharmacists’ report

Bloomberg News

In Medicaid, private insurers are paid by the state to cover low-income citizens. The insurers in turn usually contract with pharmacy-benefit managers, or PBMs, paying them to provide drug coverage. PBMs run by CVS Health Corp., Cigna Corp. and UnitedHealth Group Inc. then bill insurers for coverage, and reimburse pharmacies for drugs.

For years, small pharmacy owners have been complaining that PBMs have been shortchanging them, cutting to unsustainable amounts the reimbursement they get for dispensing prescriptions to millions of Americans. Drugstores have also claimed that PBMs are charging larger per-prescription amounts to their insurer and employer clients—and sometimes pocketing the difference.

Small pharmacies are being “choked” by pharmacy benefits managers (PBMs) that control how much they get reimbursed for drugs purchased by customers through insurance plans. Acting as a middleman between insurers and pharmacies, PBMs charge insurers and pay the pharmacy, rather than the insurer paying the pharmacy directly. But the price the pharmacy gets from the PBM can be less than what it originally paid for the drug, according to multiple pharmacists.

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