Big business feasts on big government, and ObamaCare has been a bonanza for companies that have figured out how to exploit it. Witness how CVS Health is dining out on Ohio’s Medicaid expansion.

In addition to retail pharmacies, CVS operates a pharmaceutical benefit manager (PBM) that acts as a middleman between insurers, pharmacies and drug manufacturers. PBMs decide which drugs are listed on a formulary, how much pharmacies are reimbursed and how much insurers pay.

Ohio contracts with five managed-care organizations (MCOs) to administer Medicaid benefits, four of which outsource their drug benefits management to CVS Caremark, the CVS PBM. The state uses drug claims data to set its annual drug budget. So if claims increase, the state will allocate more Medicaid funds for drugs the following year.

Yet CVS appears to be billing the state for far more than what it is paying pharmacies, driving up taxpayer costs. CVS’s actual drug payments aren’t transparent to the state or MCOs.

CVS is also attempting to drive independent pharmacists out of business and expand its retail market share. We spoke with eight current or former independent pharmacists in Ohio who complained that CVS has slashed payment rates below the pharmacists’ wholesale drug costs. They say CVS is pocketing the increased “spread pricing”—that is, the difference between what the PBM pays pharmacies and charges the state.