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Report finds Medicaid pharmacy benefit managers charging triple the going rate

A study commissioned by Medicaid officials found that pharmacy benefit managers are charging Ohio's Medicaid program three times the recommended rate (Source: “Drug middlemen charging Ohioans triple the going rate — or more,” Columbus Dispatch, June 27, 2018).

According to the study, CVS Caremark billed the state about $5.60 per script, while Optum Rx charged $6.50 per script, yet the report released last week said the “fees should be in the range of 95 cents to $1.90 per prescription.” 

That means that Ohio Medicaid’s two pharmacy benefit managers, known as PBMs, received as much as $187 million above the typical cost of administering such programs in one year — $130 million to $164 million more for CVS Caremark and $19 million to $23 million for Optum Rx.

Last week, Medicaid officials announced the results of what is believed to be the first attempt by any state to determine “spread pricing,” or the difference between how much pharmacy benefit managers are billing the state and what they are reimbursing pharmacists to fill prescriptions. It found that PBMs made $223.7 million to process nearly 40 million prescriptions from April 1, 2017, through March 31, 2018.

Meanwhile, the Ohio House on Wednesday took aim at PBMs, unanimously approving bipartisan legislation aimed at increasing transparency of drug prices and lowering prescription costs. House Bill 479, sponsored by Reps. Scott Lipps, R-Franklin, and Thomas E. West, D-Canton, would prohibit health insurers and PBMs from charging consumers co-pays amounting to more than they would pay if the drugs were purchased without insurance or more than the pharmacy was being reimbursed to fill a prescription.

It would also ban “gag rules” that prevent pharmacists from telling their customers about cheaper options for acquiring medications, such as paying out of pocket.