Study: Drug middlemen ripping off Ohio
Pharmacy middlemen are charging Ohio taxpayers three to six times as much to process prescription drugs for the poor and disabled as the industry standard.
Figures in a study commissioned by Medicaid officials indicate pharmacy benefit manager CVS Caremark billed the state about $5.60 per script, while Optum Rx charged $6.50 per script.
Yet the report released last week said the “fees should be in the range of 95 cents to $1.90 per prescription.”
That means that Ohio Medicaid’s two pharmacy benefit managers, known as PBMs, received as much as $187 million above the typical cost of administering such programs in one year — $130 million to $164 million more for CVS Caremark and $19 million to $23 million for Optum Rx.
“That’s obscene,” said Antonio Ciaccia, a lobbyist for the Ohio Pharmacists Association. “That would seem to be an outrageous amount of overcharges.”
Sen. Dave Burke, who chairs the Joint Medicaid Oversight Committee, or JMOC, said the state should be able to get a better deal.
“The question is, what do you want to buy: more (expensive) transactions or more health care?”
It’s a question Burke planned to ask Ohio Medicaid Director Barbara Sears when she appeared before the legislative panel Thursday to review the findings of the analysis of drug transactions in the tax-funded health insurance program covering 3 million Ohioans.
The committee, made up of five state senators and five representatives, provides oversight of Medicaid spending, quality of care and health outcomes, and impact of legislation on the program.
“I think (people) want better health outcomes and value; not more corporate profits,” Burke said.
CVS Caremark handles most Medicaid prescriptions as the pharmacy benefit manager for four of the five managed-care plans that coordinate health care for Ohioans on Medicaid, the state-federal health-care system for the poor and disabled. The state spent nearly $3 billion last year on drugs for those recipients.
While CVS Caremark’s federally mandated income filings appear to show it cost them 85 cents to process drug claims nationwide in 2017, CVS Health spokesman Michael DeAngelis called comparisons of those nationwide figures with numbers from Ohio a “gross oversimplification.”
As far as the consultant’s totals seemingly showing lofty earnings from Ohio Medicaid, he said, “CVS Caremark won a very competitive bidding process for the Ohio Medicaid plans we service by demonstrating that we could provide the best value, and we are held accountable by our clients to deliver that value.”
CVS Health Corp., which owns CVS Caremark and CVS Pharmacy, reported a net profit of $9.5 billion in 2017, according to its website.
Last week, Medicaid officials announced the results of what is believed to be the first attempt by any state to determine “spread pricing,” or the difference between how much pharmacy benefit managers are billing the state and what they are reimbursing pharmacists to fill prescriptions. It found that PBMs made $223.7 million to process nearly 40 million prescriptions from April 1, 2017, through March 31, 2018.
Medicaid officials declined comment on recommendations in the report — including one that would make PBM fees much lower.