Senators ask OIG to investigate PBM spread pricing in Medicaid

Washington, D.C. National Capitol Building
Two senators are asking the Office of Inspector General to investigate pharmacy benefit managers' spread pricing. (Getty/tupungato)

Two senators are asking the Office of Inspector General (OIG) to investigate pharmacy benefit managers' business practices when it comes to controversial spread pricing models.

Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore., the top Republican and Democrat on the Finance Committee, wrote in a letter (PDF) to the Department of Health and Human Services' OIG that an "increasing number of reports" raise concerns about how PBMs are operating.

Spread pricing, in which a PBM charges an insurer more for a drug than a pharmacy paid and profits off of the difference, has come under fire in several states.

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Ohio, for instance, ended contracts with the PBMs in its Medicaid program after a state report found they earned $224 million between April 2017 and March 2018 through spread pricing.

Other states, including Pennsylvania and New York, have also sounded the alarm about the practice.

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“Given the potential vulnerabilities created as a result of opaque drug pricing practices employed by entities like PBMs, we believe additional transparency and oversight in this space is warranted,” the senators wrote. “We request your office conduct a federal-level analysis of PBM practices across state Medicaid programs, including practices that may allow for inappropriate profiteering and potential anti-competitive practices in state Medicaid programs.”

Grassley and Wyden's letter comes just days after executives from five major PBMs were grilled by the Finance Committee about how they operate, which included questions about spread pricing.

At the hearing, the executives said spread pricing is not a default approach but instead one they offer to clients among several ways to pay for their services.

Some, such as CVS Caremark, have ended the practice entirely.

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