ALEXANDRIA, Va. – The National Community Pharmacists Association is proud to support the Drug Price Transparency in Medicaid Act of 2021, which would ban the use of spread pricing by pharmacy benefit managers in Medicaid managed care, require PBMs to reimburse pharmacies at a rate consistent with their acquisition plus a professional dispensing fee, and limit PBMs to an administration fee. Currently, PBMs can overbill Medicaid managed care programs, under-reimburse pharmacies for medications dispensed, and retain the difference, which is referred to as the “spread.” The bipartisan legislation was introduced by Reps. Buddy Carter (R-Ga.) and Vicente Gonzalez (D-Texas).

Douglas Hoey

“PBM spread pricing costs federal and state taxpayers hundreds of millions of dollars each year. While it pads PBMs’ pockets, it does nothing to reduce the cost of drugs for Medicaid patients, and it helps drive small business pharmacies out of business, also harming their access to care,” said NCPA CEO B. Douglas Hoey. “Spread pricing is among the most egregious PBM tactics, and it should be banned. At the same time, pharmacies need to be paid appropriately to cover their dispensing costs and make a modest profit. The pandemic has proved in dramatic fashion how vital pharmacies are to their communities. NCPA is grateful to Reps. Carter and Gonzalez for introducing this bill as part of their work to rein in PBMs.”

Multiple state Medicaid programs have indicated PBMs are using spread pricing as a way of overcharging taxpayers for their services, with Arkansas, Georgia, Kentucky, Louisiana, Maryland, New Hampshire, New York, Ohio, Pennsylvania, and Virginia prohibiting spread pricing in their Medicaid managed care programs. The Centers for Medicare & Medicaid Services in 2019 issued guidance prohibiting Medicaid managed care programs from counting the spread towards medical costs in the medical loss ratio, after NCPA encouraged the agency to eliminate spread pricing. A broader federal ban on Medicaid managed care spread pricing and a move to fair and transparent pharmacy reimbursement would save the government over $1 billion.