Practices Said to Be Common

But some pharmacy benefit auditors contend that practices described by Cahn are common in the PBM industry.

Hal Holzman, president of auditing firm Pharmacy Data Management, Inc., says the alleged tactic benefits multiple stakeholders in different ways.

"The [drug] manufacturers want them to be classified as generics, because they know the patients are going to get [low] generic copays," Holzman tells DBN. "The pharmacies — depending on what their contracts are with the PBMs — may feel either way. Generally, they like generics because they have wider [profit margin] spreads. But if they're reimbursed as a brand, that is a really good deal [for the pharmacy]."

In fact, Holzman says, drugstores want the best of both worlds. "The gold standard, as far as the pharmacies are concerned, is to get brand reimbursement and generic copays for their patients," he says. But someone still has to pick up the tab, he adds. "The ones that are paying the big dollars — these things get paid for by someone — are the payers: the employers and insurance companies."

How much money this tactic actually costs payers depends on how aggressively the PBM manipulates the definition, Holzman says. "It can easily be a couple of percentage points [of total drug spend]," he says. Drug spending of large employers can total many millions of dollars per year.