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Sen. Steve Erdman

Sen. Steve Erdman

District 47

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Straight Talk From Steve…
August 17th, 2018

The cost of prescription drugs continues to skyrocket out of control. For no one else is this problem worse than for our State’s Medicaid patients and for Nebraska taxpayers. Oddly enough, Medicaid expansion could potentially worsen the problem by making more money available to those who’ve been milking the system. One of the primary culprits of rising prescription drug costs are the Pharmacy Benefit Managers (PBMs). PBM’s are the middlemen who reimburse pharmacists for prescription drugs charged to Medicaid.

Many PBMs have been using a secretive process called “spread pricing” which generates a lot of extra revenue for them and the companies they work for. The Columbus Dispatch recently reported that PBMs rake in as much as $400 billion per year nationwide using spread pricing. While the role of the PBM was originally designed for claims processing, they now have a much larger role in managing healthcare benefits for Medicaid patients.

Spread pricing is a secretive process whereby the PBMs bill the State excessively more than they reimburse a pharmacist for filling a prescription. The difference is known as the price spread. PBMs, acting as the middlemen in these transactions, are supposed to get paid a straight administrative fee, which is usually less than $2.00 per prescription and gets charged to the State. But some PBM’s like to charge more than they should.

The state of Ohio is currently leading the fight against spread pricing. According to a recent report commissioned by the state of Ohio, in one year’s time PBM’s over-billed that state by $223.7 million. The study said that PBM fees in Ohio should fall within the range of 90 cents to $1.90 per prescription, but some of the PBM’s were billing the state $5.60 to $6.50 per prescription, which is three to six times higher than what they should have been charging. Consequently, Medicaid officials in Ohio have begun terminating contracts with those PBMs who they’ve caught practicing spread pricing.

Now that we know how the PBMs rip-off the taxpayers, the time has come for lawmakers in Nebraska and DHHS officials to begin demanding more transparency in regards to their fees. Those who milk the system for their own private and corporate gain need to have their contracts with the State terminated.

On a different note, the time has come for interested college students to begin submitting applications for working as a page at the State Capitol. I want to help qualified candidates from Western Nebraska pursue this job. So, if you will be studying in Lincoln in January consider working as a page. Pages are local college students employed by the legislature who respond to Senators’ requests for assistance on the legislative floor. Pages answer incoming calls to the chamber, and they also prepare for and assist with committee hearings. If you are a Political Science major or just interested in politics, this may be the perfect job for you. Those interested in receiving a job application should contact the Clerk’s Office at (402) 471-2271.

If you would like to know more about working as a page, or if you are a Medicaid recipient having difficulty getting your claims processed by your Managed Care Provider, or if you would like to sound off on some other issue, please don’t hesitate to contact me. My office phone number is (402) 471-2616. My e-mail address is:

Finally, if you are planning on visiting the Capitol this year, and you would like to see me or visit my office, please know that you will no longer find it in its usual place on the first floor. Due to HVAC renovation work at the Capitol Building my office has been relocated up to the 12th floor of the tower.


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Sen. Steve Erdman

District 47
Room #12th Floor
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2616
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