Iowa Medicaid Audit: PBM Made Over $100M by Obscuring Drug Costs

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A recent audit of state Medicaid records revealed how pharmacy benefit managers are using complicated and sophisticated approaches for handling prescription drug claims that ultimately overcharge taxpayers, a finding that underscores controversy surrounding these crucial middlemen in the pharmaceutical supply chain.

The audit of Iowa’s state Medicaid program found that one large pharmacy benefit manager appeared to have made more than $100 million by adjusting the amount of money paid to pharmacies without passing some of the savings back to managed care plans working on behalf of the state, according to Iowa officials. The review scrutinized records from 2019 through 2021.

The overall conclusion was similar to audit results conducted in a few other states, but in this instance, the auditors identified what amounted to creative accounting maneuvers, which not only made it possible to obscure the flow of money but evade prohibitions on a controversial pricing practice that is now outlawed in Iowa and some other states.

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