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Kentucky Attorney General Andy Beshear has launched an investigation into allegations that state pharmacy benefit managers (PBMs) have overcharged the state health insurance programs for prescription drugs and discriminated against independent pharmacies.

Beshear is seeking details on how the PBMs, hired by state Medicaid managed-care organizations and the state employee health plan, have determined, billed and paid drug reimbursement rates over the past five years in Kentucky.

A report released last month by the state indicated 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 he is investigating PBMs because he wants to identify and recover any profits improperly retained at the expense of the Commonwealth and its taxpayers and ensure Kentucky families have affordable and accessible health care.

“I am demanding answers for Kentucky families and community pharmacies who want greater accountability and transparency surrounding the cost of prescription drugs,” said Beshear. “The current system is failing Kentuckians who just want a straightforward answer on whether they are receiving and paying a fair price.”

Beshear said 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.

Last year, Sen. Max Wise, R-Campbellsville, introduced Senate Bill 5, because he said one of the state’s largest PBMs – CVS Caremark, which also owns its own chain of pharmacies – was not pay­ing independent pharmacists enough, putting many at risk of closing.

At the time, discussion centered around the significant decrease in the PBM’s professional dispensing fee of 85 cents per prescription, when the Centers for Medicare and Medicaid Services stated that the fee should be around $10.64, plus the cost of the drug being dispensed.

The provisions of that legislation lead to the recent report by the state and allow the Department for Medicaid Services to have greater oversight of pharmacy benefits once existing contracts expire.

The Ohio attorney general sued to recover nearly $16 million in prescription overcharges to the state for the cost of prescription drugs negotiated by PBMs.