Get PBMs out of NYS Medicaid - Support A2795 Gottfried / S5923 Rivera

Updated: Jun 11, 2019

PBMs are robbing the taxpayers with their money hungry agendas. PBMs or Pharmacy Benefit Managers were originally started to reduce health care spending through the creation of formularies to limit unnecessary spending - this is no longer their goal. PBMs are contracted with an insurance company for the purpose of managing all prescription claims for their members. PBMs handle the processing of prescription claims and determine not only what drugs are covered but also how much pharmacies get reimbursed for those drugs. Since some large PBMs are owned by chain pharmacies such as CVS Caremark this results in a huge conflict of interest.

PBMs have been able to structure their reimbursements in a way that allows them to continually increase drug costs while lining their pockets with all the excess.


In the example to the right, a pharmacist bills a medication for the patient that cost $40, the PBM says to charge the patient $280. From that $280, $20 goes to the pharmacist and $260 goes to the PBM. Not only did the pharmacist lose money but the PBM got all the profit off of the pharmacist's work.


What does this mean for taxpayers? Well since NYS Medicaid created Managed Care Plans that utilize PBMs several years ago, the cost of prescription benefits has gone up, continuously. The excess money is going straight to the PBMs. This not only increases the tax payers' costs but also moves the financial benefit out of NYS. Prior to the start of Medicaid Managed Care plans medicaid reimbursed pharmacies directly under what is called a fee for service program. Medicaid reimbursed pharmacies directly for the cost of the medication as well as a dispensing fee that appropriately compensates the pharmacy for the cost of filling without excess spending. A2795 Gottfried / S5923 Rivera is a bill supporting the conversion back to fee for service for NYS Medicaid claims.

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