The legislative committee that oversees Ohio’s $28 billion Medicaid program will meet Thursday for the first time this year, and legislators want to know whether the state has made progress in addressing long-standing concerns about pharmacy middlemen profiting off prescription drugs for the poor and disabled.
After eight months on the job, Medicaid Director Maureen Corcoran will make her first appearance before the Joint Medicaid Oversight Committee to provide an update that might include the results of a long-awaited report on pharmacy drug pricing.
“We’re hoping to have it before the meeting, so it can be presented,” Medicaid spokesman Kevin Walter said of the analysis conducted by an independent consultant.
The report was to focus on pricing restrictions that started Jan. 1 and ban pharmacy benefit managers, or PBMs, from using spread pricing. Under that system, PBMs had billed the state far more than they paid pharmacists and kept the difference, allowing them to net $224 million in one year, according to an earlier study by the same consultant.
The delay in evaluating whether the switch to a new “pass-through pricing model” has made any difference has frustrated lawmakers. Under the new system, PBMs are supposed to charge the state the same price they pay pharmacists to fill the prescription, presumably saving taxpayers money.
Committee members are eager to hear the findings, said the chairman, Rep. Mark Romanchuk, R-Mansfield.
Some members are dubious.
“My fear is this report is being massaged because they didn’t like the results,” said Sen. Dave Burke, a Marysville Republican and a pharmacist who is vice chairman of the committee. “I’d like to see the report, but I’m not sure I’ll trust the report.”
Sen. Bill Coley, R-West Chester, said it is past time to resolve the PBM issue and other concerns.
“I want to make sure we get this PBM problem under control,” he said. “I also want to know why we gave a retroactive fee increase to (Medicaid) managed care companies,” which hire PBMs to manage pharmacy benefits.
There might be a new fire to put out. The Dispatch reported last week that new federal data shows that prices of generic specialty drugs — often-expensive medications used to treat the most serious conditions, including HIV and cancer — have jumped since Ohio banned spread pricing in Medicaid.
The federal data confirmed a Dispatch analysis in June of more than 400,000 prescriptions from roughly three dozen pharmacies that showed a spike in specialty drug prices even though the cost of many had dropped. It also showed that reimbursements for pharmacies had increased, but that reimbursements by one PBM, CVS Caremark, were still far below what the industry considers break even.
PBMs negotiate prices and rebates with drug companies and set rates paid to pharmacists. They also establish rules such as requiring patients who need specialty drugs to get them from mail-order or specialty pharmacies, some of which are affiliated with the PBM, raising concern about potential conflicts of interest and self-dealing.
Burke and others had warned that after the elimination of spread pricing, PBMs would find another way to boost earnings.
“The oversight role of JMOC is paramount. We need to hold people accountable. It’s a lot of money,” Burke said. “We have now identified the problem. Step 2 is, how do you address it, and step 3 is, how do you measure” outcomes.
Shortly after Gov. Mike DeWine took office in January, he ordered Medicaid to rebid state contracts with managed care companies to address the PBM issue, but Burke said the administration’s policy priorities still aren’t clear to him.
“I don’t know what they want or where they are going,” Burke said.
The oversight committee hasn’t met since December primarily because its two staff members left last year and have not been replaced, and because lawmakers were focused on the state budget, Romanchuk said. Until those positions are filled, he said, his office is handling administrative duties.
Romanchuk said that in addition to addressing the PBM issue, the committee needs to catch up on changes in behavioral health services and plans to impose work requirements on able-bodied adults on Medicaid, as federal regulators recently allowed.
ccandisky@dispatch.com
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