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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

Justice Department drops insider trading inquiry against Sen. Richard Burr

Sen. Richard Burr (R-N.C.) walking through the Senate Subway in the U.S. Capitol in December 2020. Photo: Stefani Reynolds/Getty Images

The Department of Justice told Sen. Richard Burr (R-N.C.) on Tuesday that it will not move forward with insider trading charges against him.

Why it matters: The decision, first reported by the New York Times, effectively ends the DOJ's investigation into the senator's stock sell-off that occurred after multiple lawmakers were briefed about the coronavirus' potential economic toll. Burr subsequently stepped down as chair of the Senate Intelligence Committee.

Netflix tops 200 million global subscribers

Illustration: Rebecca Zisser/Axios

Netflix said that it added another 8.5 million global subscribers last quarter, bringing its total number of paid subscribers globally to more than 200 million.

The big picture: Positive fourth-quarter results show Netflix's resiliency, despite increased competition and pandemic-related production headwinds.

Janet Yellen plays down debt, tax hike concerns in confirmation hearing

Treasury Secretary nominee Janet Yellen at an event in December. Photo: Alex Wong via Getty Images

Janet Yellen, Biden's pick to lead the Treasury Department, pushed back against two key concerns from Republican senators at her confirmation hearing on Tuesday: the country's debt and the incoming administration's plans to eventually raise taxes.

Driving the news: Yellen — who's expected to win confirmation — said spending big now will prevent the U.S. from having to dig out of a deeper hole later. She also said the Biden administration's priority right now is coronavirus relief, not raising taxes.