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Ohio ends pharmacy middlemen contracts over 'spread pricing'

Posted at 6:09 PM, Aug 14, 2018

COLUMBUS, Ohio (AP) — Ohio's Department of Medicaid will end the state's contracts with pharmacy benefit managers which bill taxpayers more than they reimburse pharmacists for filling Medicaid patients' prescriptions.

The department on Tuesday directed Ohio's managed care plans to terminate contracts with pharmacy benefit managers, or PBMs, based on the "spread pricing" practice, The Columbus Dispatch reported. The state said it's moving to a more transparent pass-through pricing model Jan. 1.

Under that model, PBMs would receive administrative fees and must bill the state the same amount they pay pharmacists.

"The black box will effectively be eliminated," said Patrick Stephan, the department's director of managed care.

A state-commissioned report showed PBMs billed taxpayers $223.7 million more for prescription drugs in a year than they reimbursed pharmacies to fill those prescriptions.

Antonio Ciaccia, lobbyist for the Ohio Pharmacist Association, said they spent years trying to expose the flaws in the system.

"It is refreshing to see some substantive movement toward a more transparent model," he said.

CVS Caremark has most of Ohio's managed health care business, and it is the PBM for four of Medicaid's five managed-care plans.

Company spokesman Mike DeAngelis said it is aware of the new requirement from the Department of Medicaid, and it is "working with our clients to update our contracts moving forward."

Tuesday's action came the same day Ohio Auditor Dave Yost's office announced it would be releasing its audit of fees retained by PBMs to handle the state's pharmacy management Thursday. Yost's office said it was surprised the report would impact state policy so quickly.

Medicaid Department spokesman Tom Betti said it looked forward to reviewing the report more closely.

"We did receive a briefing on the Auditor's report yesterday and we certainly appreciate their work," Betti said in a statement. "We look forward to reviewing the report in detail when it is released, but as you can imagine it took more than 24 hours to implement this change and it has been something we have been working on for quite some time."