Auditor: Del. Prescription Program Overspent By $24.5-M

Delaware has been overpaying its pharmacy benefits manager for state employees’ prescription drug coverage over a three-year period. The overpayment amounts to $24.5-million taxpayer dollars, according to a special report from State Auditor Kathy McGuiness.

“For fiscal years 2018 through 2020, the State of Delaware spent hundreds of millions of dollars on prescription drugs for state employees,” McGuiness said. “But because of questionable and opaque practices and contract terms with its PBM, Delawareans spent more money than was necessary – most of it to line the PBM’s pockets.”

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Pharmacy benefits managers act as liaisons among insurance companies, pharmacies and drug manufacturers. The report focused on Delaware’s dealings with Express Scripts Incorporated. CVS Caremark is set to become the state’s PBM effective July 1st.

“My team reviewed the state’s contract with ESI and compared pharmacy reimbursement data. What we found was that Delaware’s drug inflation rate for 2018-20 was nearly three times the national inflationary rate. That equates to a 20.1 percent increase in total plan costs from 2018 to 2020 alone despite enrollment numbers remaining relatively flat,” McGuiness said.

“My report focuses primarily on the impact of administrative fees and spread pricing to explore how poor contracting wastes state funds,” McGuiness added. “We identified over $104 million of administrative fees alone, and I have significant concerns about the impact these PBM middlemen have on our community. For example, my report shines a spotlight on predatory PBM practices that disproportionately affect our small pharmacies, as well as Delaware’s residents and state entities.”

McGuiness, who is also a pharmacist, said the report recommends that lawmakers pass legislation that helps small independent pharmacies that are disproportionately impacted by what she calls predatory practices.