In another bid to attack high prescription drug costs, the Centers for Medicare and Medicaid Services released guidance this week to help states monitor so-called spread pricing that can unnecessarily increase what health care programs are paying for medicines.
Despite the arcane-sounding name, spread pricing is an important, behind-the-scenes issue in the opaque pharmaceutical world. Basically, this refers to what pharmacy benefit managers pay pharmacies for medicines and then bill back to state Medicaid programs. Recently, though, a growing number of states are trying to clamp down on the practice after concerns surfaced about overcharging.
Pharmacy benefit managers act as middlemen by negotiating prices with drug makers while creating formularies, or lists of medicines for insurance reimbursement. In the process, the pharmacy benefit managers collect rebates from the drug makers. And they also collect fees from both pharmacies and managed care organizations, which contract with state Medicaid programs.
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