The state of Ohio successfully demonstrated that taking for-profit drug middlemen out of Medicaid saves tens of millions of dollars a year. A new Ohio report shows that the state and its pharmacies benefited handsomely financially from the elimination of corporate pharmacy benefit managers (PBMs) in its Medicaid program and the establishment of one state PBM, reports Marty Schladen for Ohio Capital Journal.
Ohio pharmacies had been struggling to stay afloat because PBMs were not paying them adequately for their Medicaid patients. So, Ohio kicked the PBMs out of the Medicaid program. And, pharmacies saw 12-fold increases in their dispensing fees, $9 per prescription v. $0.73. Moreover, almost every Ohio pharmacy agreed to fill prescriptions for people with Medicaid.
Ohio also gave people with Medicaid coverage from specialized compounding pharmacies, mail-order pharmacies, home delivery pharmacies, and specialty pharmacies.
Without corporate PBMs in Medicaid, Ohio saved $333 million through the elimination of duplicative administrative costs. Administrative costs fell, while accountability and transparency grew. Net savings in Ohio were $140 million because the state increased dispensing fees to pharmacies. Milliman conducted the study.
The biggest PBMs–ExpressScripts, OptumRx and CVS Caremark–represent almost 80 percent of the business in the US. They are each owned by a big insurer and work for those insurers, as well as many others. Their job is to negotiate drug prices with manufacturers, design the insurers’ list of covered drugs (formulary), establish the pharmacy networks, and reimburse the pharmacies their established rates for the drugs.
A Columbus Dispatch investigation in Ohio had shown that the PBMs charged the state a lot more for drugs in Medicaid than the PBMs paid the pharmacies dispensing them. A separate state-commissioned study showed that the state paid $224 million more for drugs than the pharmacies received for dispensing them. Consequently, Ohio’s Medicaid department created its own PBM.
Several state and federal lawsuits against the PBMs have followed. Now, 38 state attorneys general are urging Congress to forbid health care giants to own PBMs and pharmacies. They say that the PBMs give priority to their own pharmacies, harming competitors.
Here’s more from Just Care:
- GAO finds US drug prices more than four times those in France
- Online pharmacies can save you money
- Case study: Costco saves one couple hundreds of dollars over Medicare Part D
- Immediate effects of Trump’s tax bill
- President Trump’s prescription drug executive orders won’t bring down prices
