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Analysis of PBM spread pricing in Michigan Medicaid managed care
Analysis of PBM spread pricing in Michigan Medicaid managed care

3 Axis Advisors estimates that Michigan Medicaid managed care manages at least $250 million a year in generic drug spending. Michigan’s Managed Care Organizations (MCOs) contract with Pharmacy Benefit Managers (PBMs) to collectively manage these funds. Recently, Ohio and Kentucky have found that the nature of these contracts between MCOs and PBMs result in a dynamic called “spread pricing,” in which the PBM “buys” a drug at a low cost from a pharmacy and “sells” the same drug at some higher cost to the MCO. This project was commissioned by the Michigan Pharmacists Association (MPA) to assess the degree of generic drug spread pricing within Michigan’s Medicaid managed care program.

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3 Axis AdvisorsMedicaid, MCO, PBM, Michigan, Spread pricing, Managed Care, Pharmacy, AWP
Illinois Medicaid managed care pharmacy analysis
Illinois Medicaid managed care pharmacy analysis

In 2018, Illinois expanded Medicaid managed care to more than 550,000 citizens across the state. This change raised concerns with many providers before its implementation, and once in effect, community pharmacists began expressing concerns that reimbursements within the Medicaid managed care program were not covering their cost to dispense prescriptions to those beneficiaries. This study was commissioned by the Illinois Pharmacists Association (IPhA) to analyze change in reimbursements and state costs as a result of the 2018 Illinois Medicaid managed care expansion.

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3 Axis AdvisorsMedicaid, MCO, Managed Care, PBM, Spread pricing, Pharmacy, Illinois
Analysis of PBM spread pricing in New York Medicaid managed care
Analysis of PBM spread pricing in New York Medicaid managed care

Spread pricing is a core component of the traditional pharmacy benefit manager (PBM) business model. In a spread transaction, PBMs generate revenue by charging the payer one price for a drug, paying a lesser amount to the pharmacy that dispenses the drug, and then retaining the difference. The PBM has separate contracts with the payer and the pharmacy that allow it to price the same claim differently, generating revenue from the spread. This study was commissioned and funded by the Pharmacists Society of the State of New York (PSSNY) to estimate the nature and extent of spread pricing within the New York Medicaid managed care program. Further, the objectives are to explain the nature of a pharmacy transaction, illustrate how spread is impacting both payer and pharmacy, and estimate spread on generic drug claims using a limited, but robust, sample of pharmacy data.

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3 Axis AdvisorsMedicaid, PBM, New York, Spread pricing, Managed Care, MCO, Pharmacy