Beshear says he’s investigating pharmacy benefit managers for possible overcharging, and discrimination against independents

Republican Gov. Matt Bevin and Attorney General Andy Beshear are the most likely nominees for governor in the Nov. 5 election.
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Attorney General Andy Beshear announced March 21 that he is investigating pharmacy benefit managers, the “middlemen” between drug companies and health insurers, including Kentucky’s Medicaid program and state-employee health plan.

Beshear is investigating whether PBMs have overcharged the state “and discriminated against independent pharmacies,” his office said in a press release, which noted that a state report “indicated two PBMs took in $123.5 million last year from the state Medicaid program by paying pharmacies a lower rate to fill prescriptions, while charging the state more for the same drugs.”

The release said, “It is estimated that more than 1.5 million Kentuckians receive pharmacy benefits through Medicaid and the state employee health plan’s PBMs. Thousands of other Kentuckians receive pharmacy benefits through PBMs retained by their private insurance plans. . . . Beshear said PBMs were originally established to help companies and government programs better manage pharmacy costs, but have grown into powerful industry middlemen that go to great lengths to hide and complicate drug pricing information.”

The international news agency Reuters reports, “The investigation comes against the backdrop of widespread criticism of rising costs of prescription medicines in the United States, with PBMs, middlemen who negotiate prices for employers and health insurers, coming under intense scrutiny.”

The state report, titled “Medicaid Pharmacy Pricing: Opening the Black Box,” was done by the state Department of Medicaid Services on orders from the General Assembly, Medicaid Commissioner Carol Steckel said upon its release, “We have additional steps that we will need to take in order to make this program fully transparent.”