Investor Presentaiton
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Methods to steer patients toward PBM-owned pharmacies;
Potentially unfair audits of independent pharmacies;
Complicated and opaque methods used to determine pharmacy reimbursements;
The prevalence of prior authorizations and other administrative restrictions;
The use of specialty drug lists and related specialty drug policies; and
The impact of rebates and fees provided by drug manufacturers on preferred drug
list design and the costs of prescription drugs to payers and patients.
"Although many people have never heard of pharmacy benefit managers, these
powerful middlemen have enormous influence over the U.S. prescription drug
system."
Lina M. Khan, Federal Trade Commission Chair
Spread pricing is another high-risk area. Spread pricing has been cited as costing governments,
pharmacies, and patients more money for the delivery of prescription drugs. Spread pricing occurs
when a PBM keeps the difference between what is charged to the health plan and what is reimbursed
to a pharmacy. For example, an insurer agrees to pay a PBM $100 for a prescription, but the PBM's
contract with the pharmacy states it will reimburse the pharmacy $75. If the PBM keeps the $25
difference, this is considered spread pricing. Health plans often do not know the amounts reimbursed
to pharmacies, as PBMS would consider that information proprietary. At least 11 states have banned
spread pricing in their Medicaid programs. In Oregon, CCOS and their PBMs are permitted to split the
spread, depending on their contracts.
Figure 3: Spread pricing happens when PBMs keep the difference between what is paid to health plans and
pharmacies
Health plan
$100
Health plan pays
contracted amount of
$100 to PBM
PBM
Pharmacy
$25
The PBM keeps the $25
difference, which is
called the spread
$75
Independent of the
health plan contract,
the PBM contracts with
the pharmacy and sets
a reimbursement rate
of $75
Some contracts with PBMS state the difference will be split between them. In the example above, both
the insurer and PBM would each keep $12.50 if the difference were split evenly. Oregon's Medicaid
program allows PBMs to operate under either a pass-through contract or a model where the PBM and
CCO each receive a portion of the spread, known as a pay-for-performance contract. While spread
Oregon Secretary of State Report 2023-25 | August 2023 | page 4View entire presentation