Drug Middlemen, Under Fire in Senate Bill, Seen Fighting Losses

Drug middlemen will continue to squeeze insurers and consumers to make up for profit losses if a practice they use to overcharge insurers for a drug is banned, a key player in the state-level drug-pricing debate predicts.

The process is called “spread pricing” and happens when the liaisons between the drugmakers and the insurers charge an insurer more for a drug than the amount they reimburse to a pharmacy for that drug. It creates a profit margin for pharmacy benefit managers, often referred to as the “spread.”

Scrapping that process is intended to lower health-care costs, which has been a ...