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Illustration: Sarah Grillo/Axios

Data analyses from 46brooklyn Research, a new firm started by two people with experience in the pharmacy industry, outline historic trends of drug prices and costs in Medicaid programs across the country in an open, transparent format.

The bottom line: These datasets are the clearest examples yet that show specifically how some states are getting bad deals on prescription drugs — and how middlemen like pharmacy benefit managers manipulate the current drug pricing system for their own gains.

The details: 46brooklyn's visualizations use and merge several sources of federal data. The resulting maps and graphics detail what PBMs charge state Medicaid programs for certain drugs and what those drugs cost pharmacies. The spread between those figures essentially is the profit that PBMs and other middlemen collect.

  • Eric Pachman, a former manager of pharmacies, and Antonio Ciaccia, a lobbyist with the Ohio Pharmacists Association, decided to mine the data independently after noticing pharmacy margins tied to Ohio's managed Medicaid program were dropping everywhere. "It's exposing how the system works," Pachman said.
  • The data mostly show PBMs are reaping large Medicaid windfalls on generic drugs, not brand-name drugs (although clandestine rebates make brand-name drugs lucrative in other markets).
  • In numerous instances, after a brand-name drug loses patent protection and generics hop onto the scene, the costs of that drug decrease dramatically.
  • However, many states are not benefiting from those falling generic prices and are paying significantly more.

How it works: One of the most visible examples is imatinib mesylate, the generic version of Novartis' cancer drug Gleevec. A pharmacy's acquisition cost of a 400-milligram tablet of generic Gleevec roughly costs $84. But Indiana's Medicaid program paid middlemen almost $300 per pill, while Washington's Medicaid agency paid only $109 per tablet. Several other states paid more than $200 per pill.

"That's right — same drug, same time, different state, way different price," Pachman and Ciaccia wrote.

But this is not a one-off phenomenon.

  • Pharmacies were paid about $0.39 per unit of hydroxychloroquine, an immunosuppressive drug, and that amount has decreased steadily since 2015. But PBMs billed Kentucky more than $2.50 per unit.
  • Costs for a 6-milligram tablet of paliperidone, a schizophrenia drug, were about $12 in Ohio. But the state was charged more than $17.50 per unit, which the Columbus Dispatch has reported. The spreads for paliperidone were even larger in Arizona, Indiana, Nevada and New Hampshire.

"One of the key components of the system is that transition of brand-name drug to generic drug," Ciaccia said. "That is the core cost-containing measure of the U.S. system. And if you would allow a PBM or any third-party vendor to over-inflate that amount ... you are being set up to lose every time."

The other side: The Pharmaceutical Care Management Association, which lobbies on behalf of PBMs, said in a statement that "PBM clients," including state Medicaid programs, "choose the type of contracts they have with PBMs. These are tough, experienced negotiators who choose exactly the type of contracts, formularies and transparency levels they want. If one PBM doesn't give them what they want, a competing PBM surely will."

Reality check: Most PBM clients are in the dark about how drug prices, rebates and savings really work.

The big picture: If these kinds of games are happening in Medicaid, it's not implausible to imagine they are happening in other areas. And while the data highlight problems in the drug supply chain, they do not get at the high list prices that drug companies set.

Go deeper: The full datasets.

Go deeper

Updated 8 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Pfizer and Moderna boosters overwhelmingly prevent Omicron hospitalizations, CDC finds — Omicron pushes COVID deaths toward 2,000 per day — The pandemic-proof health care giant.
  2. Vaccines: The case for Operation Warp Speed 2.0 — Starbucks drops worker vaccine or test requirement after SCOTUS ruling — Kids' COVID vaccination rates are particularly low in rural America.
  3. Politics: Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" by Biden on anti-mask school policies — Federal judge blocks Biden's vaccine mandate for federal workers.
  4. World: American Airlines flight to London forced to turn around over mask dispute — WHO: COVID health emergency could end this year — Greece imposes vaccine mandate for people 60 and older — Austria approves COVID vaccine mandate for adults.
  5. Variant tracker

Arizona governor sues Biden administration over COVID funds tied to mandates

A teacher prepares a hallway barrier to help students maintain social distancing at John B. Wright Elementary School in Tucson, Arizona, on Aug. 14, 2020. Photo: Cheney Orr/Bloomberg via Getty Images

Arizona Gov. Doug Ducey (R) filed a lawsuit Friday against the Biden administration for ordering the state to stop allocating federal COVID relief funds to schools that don't comply with public health recommendations such as masking, the Arizona Republic reports.

Why it matters: The Treasury Department said last week that the state would have to pay back the money if Ducey does not redesignate the $173 million programs to ensure they don't "undermine efforts to stop the spread of COVID-19."

Federal judge blocks Biden's vaccine mandate for federal workers

President Biden speaking from Eisenhower Executive Office Building on Jan. 21. Photo: Yuri Gripas/Abaca/Bloomberg via Getty Images

A federal judge in Texas blocked the Biden administration from enforcing its coronavirus vaccine mandate for federal workers on Friday, citing the outcome of last week's Supreme Court ruling that nullified the administration's vaccine-or-test requirement for large employers.

Why it matters: It's a blow to President Biden's efforts to increase the U.S.' vaccination rates, though much of the federal workforce has already been vaccinated against the virus.