Kentucky launches probe into drug overcharges by pharmacy benefit managers

(Reuters) - Kentucky Attorney General Andy Beshear said on Thursday he had launched an investigation into allegations that pharmacy benefit managers (PBMs) had overcharged state health insurance programs for drugs and discriminated against independent pharmacies.

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.

Ohio’s attorney general earlier this week sued UnitedHealth Group’s OptumRx unit, which houses the largest U.S. health insurer’s PBM business, to recover nearly $16 million in prescription drug overcharges. The lawsuit followed a probe that began under Governor Mike DeWine before he left his position of attorney general earlier this year.

Beshear said in a statement that he was seeking details on how PBMs have determined, billed and paid drug reimbursement rates over the past five years in Kentucky.

“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,” Beshear said.

A report released last month by the state indicated that 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, Beshear said.

Over 1.5 million Kentuckians receive pharmacy benefits through Medicaid and the state employee health plan’s PBMs, and thousands more receive pharmacy benefits through PBMs retained by private insurance plans, according to estimates.

Reporting by Tamara Mathias in Bengaluru; Editing by Sriraj Kalluvila