Ohio launches investigation into PBM practice

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COLUMBUS – Six months after state officials were asked if they had the power to crack down on a controversial lucrative maneuver by pharmacy benefit managers, Ohioans finally have an answer: They do.

And they will.

For the first time, the State Department of Medicaid is requesting a detailed account of the so-called “clawback” charges that drug benefit managers, known as PBMs, assess pharmacies after dispensing prescription drugs to certain of the poorest and poorest over 3 million people in Ohio. residents with disabilities.

Since these recoveries are not invoiced until well after the delivery of the drugs to the recipients, the state cannot keep track of them, admitted the director of Medicaid, Maureen Corcoran, at the end of October.

This gap leads to three major ramifications:

1. The cost of hundreds of thousands of Medicaid drug transactions, as recorded by the state and reported to the federal government in recent years, is inaccurately inflated.

2. PBMs violate at least the intent and spirit of an Ohio law prohibiting clawbacks, as well as a separate provision requiring “transfer pricing,” Corcoran said. The latter demands that PBMs charge the state the same price they pay pharmacists to fill a prescription for a Medicaid recipient.

3. The data that Ohio Medicaid relies on to set its payment rates, including the amount of state and federal taxpayers assessed, is likely flawed. She said that’s probably true in most states, which means taxpayers across the country are being billed billions too much to pay for Medicaid prescriptions.

Lisa Lawless, spokesperson for the Medicaid department, said the agency is simply exercising its oversight authority in light of the past “lack of transparency and excessive profits” of PBMs. Thus, the agency needs “visibility on post-arbitration adjustments” made by PBMs after the ministry in force has deemed drug transactions closed.

The action covering the calendar years 2020 and 2021 comes more than six months after The Dispatch reported on the vast national reach of the recoveries. Corcoran said at the time, and repeatedly over the following months, that she was not sure her agency had the power to prosecute the possible abuse of Ohio law.

“This is an important step in the direction of greater accountability for how Medicaid dollars are spent on prescription drugs, and it is a necessary response to recent PBM maneuvers to further obscure the drug prices and evade state attempts to curb waste, ”said Antonio Ciaccia. , head of drug price analysis companies 46Brooklyn and Three Axis Advisors.

“You get ripped off,” says the reviewer; PBMs strongly disagree

Greg Lopes, assistant vice president of strategic communications for the PBM business group, the Pharmaceutical Care Management Association, said the group could not specifically address the Ohio Medicaid investigation of drug chain intermediaries.

“PBMs will continue to work on behalf of Ohio Medicaid registrants to reduce prescription drug costs,” he said.

Spokesmen for PBMs have repeatedly stated that they do not charge “clawback” as they define it, and that money assessed by pharmacies is allowed under complex “generic effective rate” contracts.

Critics disagree.

“You’re getting ripped off,” Delaware state auditor Kathleen McGuiness said after her office completed a study in June on the lack of transparency and accountability in “predatory” drug pricing.

Eric Jergens, owner of Madison Avenue Pharmacy in Springfield, said last summer, “I call them ‘pay to play’ fees. … They have almost ruined or demolished independent pharmacies in the last few years.

Long Trinh, regional director of pharmacy operations and compliance for Providence St. Joseph Health, a network of 52 hospitals and nearly 1,100 clinics stretching from Alaska to Texas, in July called the PBM strategy “ likely culprit and contributing to why we are the most expensive country in the world compared to other nations when it comes to health spending.

Pharmacies are essentially forced to accept contracts that allow recoveries because in order to stay in business they have to contend with a strongly consolidated US healthcare market.

Only three PBMs control over 75% of the US market and are among the largest companies in the world: CVS Health (parent of CVS Caremark, a PBM) ranks 4th in the US Fortune 500 ranking; UnitedHealth Group, the parent company of PBM Optum, is 5th; Cigna, parent company of Express Scripts, has climbed more than 50 places to No. 13 in just one year after completing its merger with PBM.

Has the state abandoned oversight of drug benefit managers?

The state is seeking information on PBM recoveries from the five managed care organizations it has hired to carry out the day-to-day operations of the Medicaid program. These five have contracted with PBMs to handle drug deals.

The Dec. 22 Medicaid memo noted that managed care plans are supposed to track PBM spending; if they have not, they are asked “please explain the discrepancy”. The state wants a complete list of all “effective rate contracts” as well as the maximum time allowed by the agreements to finalize payments with pharmacies.

The questions, prepared by Medicaid consultant Milliman, are quite detailed, right down to a request for which drugs on the state-approved formulary are subject to clawback. It’s a list of over 30,000 drugs.

Medicaid’s request appears to confirm that the state has not closely monitored whether managed care organizations are fulfilling their responsibilities of keeping tabs on PBMs.

For example, organizations are contractually obligated to “check and review contracts or agreements between the PBM and their pharmacies at least once a year to ensure that the correct pricing has been applied”. But the state agency asked earlier if managed care groups even have such a provision in their contracts with PBMs.

The Medicaid guideline and questionnaire were not told about what would happen if managed care groups or PBMs did not provide the requested information. Responses are expected on January 14.

It is also not clear what the state will do if the use of the recovery is confirmed. Several other states are collecting information for possible prosecution. Ohio Attorney General Dave Yost declined to say whether such an investigation was warranted in Buckeye state.

Several states are set to emulate Ohio’s 2019 ban on clawbacks, as PBMs increasingly use them when revenues decline due to crackdown on previous maneuvers such as spread pricing. It is a process in which a PBM pays pharmacies a lower rate of drugs than they received from the state for the same drug purchase.

Maureen Corcoran, Director of the Ohio Department of Medicaid, speaks with the Joint Medicaid Oversight Committee in 2019.

Critics say it scams patients and taxpayers

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