CVS Caremark recently charged Wapello County, Iowa, $198.22 for a bottle of generic antipsychotic pills dispensed by a local pharmacy. CVS reimbursed the pharmacy just $5.73 for the pills.

We know about this enormous markup because one of the owners of the pharmacy, Mark Frahm, read a public notice in the local Ottumwa Courier and did some sleuthing. Frahm’s investigation ultimately had a significant  impact that continues to reverberate. Locally, it led the county jail to drop CVS as its pharmacy benefit manager (PBM) and purchase meds directly from Frahm’s South Side Drug. The move is “expected to save the county tens of thousands of dollars,” according to the Courier.

It also led to a state senate hearing on drug pricing and served as the lede for a Bloomberg News feature detailing the enormous sums of money middlemen like CVS earn through a practice known as “spread pricing.”

All because of a public notice.

Frahm (photo above courtesy of the Ottumwa Courier) is a regular reader of the notices published every weekday in the back of the Courier. He told us he reads them to learn what’s happening in his community — who died, whose mortgages are being forceclosed on, what the local government is up to. “I also read them to know when I need to congratulate my customers for getting job promotions.” Those kinds of details are often noted in the minutes of local city council and county board of supervisors meetings published in the paper.

In January, he noticed a line item for CVS Caremark in the county’s list of expenditures that are included every month in those meeting minutes. His antenna was already up because he knew South Side Drug was losing money on the medications it had been selling through CVS to the county jail. So he decided to visit the facility and compare the prices they were paying CVS to the amounts he was being reimbursed for the same drugs.

What he found stunned him. 

In one case he described to the Courier, South Side Drug bought medication from a wholesaler for $1,500 and was reimbursed only $1,000 by CVS. The PBM charged the jail $5,000 for the same drugs.

“Middlemen have to make some money, but we didn’t expect it to be this extreme,” Frahm told Bloomberg News. “We figured everyone was playing fair.”

Now that the jail has dropped CVS as its PBM, it is paying the local pharmacy just $1,500 plus a $12 handling fee for the same medication. And the county is saving almost $3,500 on the transaction.

“(Frahm) wanted our business directly, for us to work through him; he told us he’d charge us what his cost was, plus a handling fee,” Sheriff Mark Miller told the Courier. “It seems fairer all around.”

In April, Wapello County Supervisor Jerry Parker accompanied Frahm to Des Moines where they testified in a “highly charged” hearing of the Iowa House Government Oversight Committee. The committee is considering legislative fixes so the full impact of the public notice in the Courier may yet to have been felt. So the full impact of the public notice in the Courier may yet to have been felt.

We don’t know how much Wapello County is paying the Courier every year to publish its notices. But we can guarantee it’s far less than the tens of thousands of dollars it will now save because Mark Frahm reads them.