Last week, we were met with a delightful surprise as we were perusing through the CMS website and discovered an out-of-the-blue drug pricing data update just begging to be downloaded. The hidden treasure was the freshly-updated CMS State Utilization database, which provides quarterly drug pricing data that shows what state Medicaid programs are spending on prescription drugs, providing an excellent window into the price-setting practices of the prescription drug supply chain. This most recent CMS data update ended up filling in most of the Q3 2018 divots and extended the 2018 data to include large portions of the fourth quarter. We have updated all of our dashboards that rely on this dataset, rolling all of them forward to Q4 2018. We couldn't resist sneaking an extended peak at the data, and while we will offer more in-depth analyses soon, we wanted to give some of our initial takeaways.
As drug pricing scrutiny grows, PBM spread pricing of cheap, generic drugs is becoming a hot topic of conversation in states across the country. After the state of Ohio opened the books thanks to an audit from the state auditor, the uncovered $224 million PBM spread now has other states scrambling to see what they are being charged as well. One of those states is Pennsylvania, where their state auditor is trying hard to get the data he needs to see where the money is going in the third largest managed care program in the country. Since there are many folks wondering what’s going on in Pennsylvania, considering the current lack of hard data, we decided to dig into the publicly available data to see if Pennsylvania appears to have the makings of an “Ohio problem.”
Earlier this week, Bloomberg reporters Robert Langreth, David Ingold, and Jackie Gu published their results of a fascinating deep dive into Medicaid generic drug prices in their article, “The Secret Drug Pricing System Middlemen Use to Rake in Millions.” The piece did an excellent job explaining the ins and outs of the hidden pricing spreads that exist on generic drugs, and it featured some intuitive visualizations that helped educate readers who may not have been familiar with these little-known drug price tactics. Bloomberg’s methodology was nearly identical to what we used to create our Medicaid Drug Pricing Heat Map, so not surprisingly, the results were very similar as well. The analysis conducted by Bloomberg also integrated the results of a recent report from the state of Ohio's Auditor, which found that in a one-year span, PBMs pocketed more than $224 million dollars in spread pricing. Armed with this data, we set out to discover if we could deduce what pharmacy margins were over that same time period in an effort to peel back new layers of the onion and provide better information on where the money is going. Check out our newest drug pricing report to learn more about where the money is going on hidden prescription drug markups.
It is well-known that competition in the generic manufacturer marketplace drives drug prices down considerably. Plaquenil, a brand-name drug that has been on the market since 1955, eventually saw generics enter the market almost a quarter of a century ago. By all accounts, generic Plaquenil – known as hydroxychloroquine – had become a very affordable drug at approximately 10 cents per pill. But FDA actions quickly dried up the supply of the drug, causing prices to balloon more than 2,500%. 46brooklyn’s newest drug pricing report examines how state Medicaid programs were impacted by this price spike, and how some states continued paying elevated rates even after the price came crashing back down.