Iowa Audit Finds PBM Made $100M Obscuring Drug Costs
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- Iowa's Medicaid audit found that one large PBM appeared to make more than $100 million by adjusting payments to pharmacies without passing some of the savings back to managed care plans working on behalf of the state, according to Iowa officials.
- Auditors scrutinized Medicaid records from 2019 through 2021 and identified "creative accounting maneuvers" that obscured the flow of money and evaded prohibitions on a controversial pricing practice.
- The controversial pricing practice flagged by auditors is now outlawed in Iowa and some other states, raising the question of how PBMs continued profiting from it through at least 2021.
- Iowa's findings echo audit results from a few other states, suggesting a structural pricing problem in how PBMs handle prescription drug claims rather than a one-off lapse.
- The audit underscores longstanding controversy surrounding PBMs as middlemen in the pharmaceutical supply chain who ultimately determine what taxpayers pay for prescription drugs.
Why it matters: Iowa's Medicaid program overpaid a single PBM by more than $100 million between 2019 and 2021 through accounting maneuvers that sidestepped the state's own ban on a controversial pricing practice, revealing that regulatory prohibitions alone do not close the loophole. Because similar audit findings have surfaced in other states, the Iowa case points to a structural opacity in PBM drug pricing that affects every state Medicaid budget relying on these middlemen.
