Budget envisions single PBM
Frustrated by repeated revelations about middlemen in Ohio’s Medicaid drug-supply chain, legislative leaders agreed on a plan Tuesday to add transparency while slashing the authority of private managed care companies and the pharmacy benefit managers they hire.
The agreement giving the state unprecedented control over how prescription drugs get to Ohio’s poor, blind and disabled — approved by a conference committee as part of the new twoyear budget — directs the Department of Medicaid to cut out the managed care plans and contract directly with a single pharmacy benefit manager, or PBM, to administer the drug benefits.
That PBM would be required to report regularly to the state how much it pays for drugs, how much it pays pharmacies to dispense medications, and other financial details.
The agreement also would provide $100 million for pharmacies — targeting those with the highest shares of Medicaid business — in an effort to make up for low reimbursements that have forced many to close in recent years.
“The goal here is to ensure we don’t have hundreds of millions of dollars in overspending,” said Travis Butchello, deputy policy director on health issues for House Speaker Larry Householder.
Senate President Larry Obhof said, “We had substantial input from the administration and language we were comfortable with. ... It makes sense to provide relief to pharmacies.”
The plan includes provisions sought by both chambers.
Kevin Walter, spokesman for the Ohio Department of Medicaid, declined to comment.
PBMS, including CVS Caremark and Optumrx in Ohio’s Medicaid program, have come under scrutiny here and elsewhere for lack of transparency in drug pricing as prescription costs soar. A state study last year found that PBMS billed Medicaid $244 million more in a single year than they paid pharmacies, resulting in a profit three to six times the standard industry amount.
“The legislature wants to take an active role in this,” Butchello said. “While we want the (Medicaid) department to do their work, we also want to make sure there is legislative accountability here and oversight of the process of how these dollars are spent.
“With all the reporting requirements that we put in these policies, the
“We still strongly believe that PBMS with conflicts of interest in the pharmacy marketplace should not have pricesetting capabilities, and until that is resolved, both the state and its providers will be vulnerable to be taken advantage of.”
Antonio Ciaccia of the Ohio Pharmacists Association
legislature is confident we’re going to be able to paint a much clearer picture of dollars that are being spent, reimbursements going to pharmacists, and really where the cost drivers are in the drug benefit and how we can ensure as a state that we are not spending more than we should be” for pharmacy benefits.
Butchello said the hybrid proposal should address problems uncovered in the past 16 months by The Dispatch, plus give Medicaid leaders authority to tackle any problems that emerge. The goal was to reform the entire drug supply chain, he said.
Antonio Ciaccia of
the Ohio Pharmacists Association said, “While we have some concerns with the possible collateral damage of dealing with a new PBM with monopolistic power in the Medicaid program, we believe that the legislature’s reinvestments in Ohio pharmacies are a sign that there’s an expectation that the future will be sustainable and protect access.
“We still strongly believe that PBMS with conflicts of interest in the pharmacy marketplace should not have price-setting capabilities, and until that is resolved, both the state and its providers will be vulnerable to be taken advantage of.” Under the plan:
• The Medicaid department will hire a single pharmacy benefit manager.
• Managed care plans will be required to contract with that PBM to handle claims and clinical duties.
• The PBM will be required to disclose all conflicts of interest, including ownership interests and affiliations. “This was done to ensure that there is no — for lack of a better term
— self-dealing,” Butchello said.
• The PBM will be required to disclose all drug pricing arrangements with drug manufacturers and distributors; the arrangements will be kept confidential.
• The contract will be rebid every four years, and PBMS could fined or even fired for non-compliance.
The agreement does not include earlier House provisions requiring the selected PBM to act as a fiduciary for the state, meaning that it legally would have to put the state’s interests ahead of its own. Nor does the pact include House-sought bans on PBMS demanding money back from pharmacists after a transaction and on gag rules that prevent pharmacists from telling customers that they’d save money by paying out of pocket for a drug rather than using their insurance.