Drug pricing

Task force formed to address prescription drug costs

As Ohio continues to combat skyrocketing prescription drug costs, a new panel of government, business and consumer advocates is exploring ways to provide greater price transparency and ensure potentially life-saving medications are affordable and accessible (Source: “State task force tackling high prescription drug costs,” New Philadelphia Times Reporter, Feb.  26, 2020).

The Prescription Drug Transparency and Affordability Advisory Council met for the first time Wednesday, tasked with making recommendations to Gov. Mike DeWine and state lawmakers by June 30.

“What we hope to achieve at the end of the process is a series of recommendations that we as the state, the administration and the legislature, can use to help identify opportunities for cost savings,” said Matt Damschroder, director of the Ohio Department of Administrative Services and council chairman.

Ohio spends about $3.5 billion a year on prescription drugs for state employees, injured workers, Medicaid beneficiaries, incarcerated prisoners and others. Medications are purchased by half a dozen state agencies, including the departments of Medicaid and Mental Health, Bureau of Workers’ Compensation.


Ohio joins price-fixing lawsuit against generic drug makers

Attorneys general from more than 40 states, including Ohio, are alleging the nation’s largest generic drug manufacturers conspired to artificially inflate and manipulate prices for more than 100 generic drugs, including treatments for diabetes, cancer, arthritis, and other medical conditions (Source: “States bring price fixing suit against generic drug makers,” Toledo Blade, May 13, 2019).

The lawsuit, filed in federal court in Connecticut on Friday, also names 15 individual senior executives responsible for sales, marketing, and pricing.

Ohio Attorney General Dave Yost announced Monday the state would join 44 others in the lawsuit.

“Ohioans who need medicine might think generic drugs would be their cheapest option — but some manufacturers have rigged the systems to avoid competition,” Mr. Yost said in the statement. “That's not how a free market works, and the conspiracy to avoid competition makes prices higher — and it’s against the law. This lawsuit is the prescription for lower medicine prices in a free market.”


Ohio lawmakers begin new push for drug price transparency legislation

Reps. Scott Lipps, R-Franklin, and Thomas E. West, D-Canton, have reintroduced legislation aimed at increasing price transparency for both consumers and pharmacists (Source: “Lawmakers resume push for transparency, end to gag rules by pharmacy middlemen,” Columbus Dispatch, Feb. 12, 2019).

The House passed the legislation unanimously last year, but after receiving an initial hearing in December, it failed to clear the Senate before the two-year session ended Dec. 31.

Legislators' efforts to rein in pharmacy benefit managers, or PBMs, come a week after Gov. Mike DeWine ordered the Department of Medicaid to rebid contracts with managed care companies that hire PBMs to negotiate drug prices with manufacturers and rates paid to pharmacists to fill prescriptions.


Ohio legislators consider bill to end ‘step therapy’ for prescription drugs

Lawmakers are pushing measures that would enable patients to obtain medicine that their insurers wouldn’t normally cover unless they tried cheaper drugs first and were unsuccessful (Source: “Ohio bills would make it easier for patients to get more costly meds,” Cleveland Plain Dealer, Nov. 13, 2018).

With only weeks left before the General Assembly session ends, the bipartisan sponsors of Senate Bill 56 and House Bill 72 -- which are identical -- hope that one of the bills prevails. Sixty patient and physician groups back the effort to regulate what managed care organizations call “step therapy,” since patients begin with the most cost-effective and widely proven drug and progress to more expensive and riskier drugs only when the cheaper ones are unsuccessful.

Health insurers, however, oppose the legislation. They note patients are grouped together in insurance pools, and the costs of the more expensive drugs will be passed on to everyone if the legislation passes. Prescriptions currently account for 23 cents of each dollar people pay on their premiums. Ohio Medicaid has cautioned the legislation could cost the state tens of millions of dollars a year.

“The insurance plans have been the primary and virtually sole opponent,” said sponsor Sen. Peggy Lehner, a Dayton-area Republican. “Medicaid hasn’t taken a position against it but they have expressed concerns. One of those are the costs that might be incurred."

However, 18 states have already passed similar “patient protection laws” on step therapy and none have reported major price hikes, Lehner said.


Ohio, other states attempting to reign in drug costs

In an effort to reign in drug costs, more states are are trying to regulate middlemen who play a crucial role by managing drug benefits for employers and insurers, while taking payments from drug companies in return for giving preferential treatment to their drugs (Source: “States Rush to Rein In Prescription Costs, and Drug Companies Fight Back,” New York Times, Aug. 18, 2018).

The bipartisan efforts by states come as President Trump and his administration put pressure on drug companies to freeze prices and reduce out-of-pocket costs for consumers struggling to pay for drugs that often cost thousands of dollars a month.

Twenty-four states have passed 37 bills this year to curb rising prescription drug costs, according to Trish Riley, the executive director of the National Academy for State Health Policy, a nonpartisan forum of policymakers, and several state legislatures are still in session.

In Ohio, Medicaid officials announced this past week that they had a new way to pay for prescription drugs. Pharmacy benefit managers will no longer be allowed to keep any of the payments they receive from drug manufacturers. The money must be passed on to Medicaid health plans and used for the benefit of Medicaid recipients, starting Jan. 1.

Ohio officials said they wanted to know whether the benefit managers had been overcharging the state, but were frustrated in trying to obtain drug pricing information.


Medicaid orders new Medicaid managed care contracts with PBMs

The Ohio Department of Medicaid directed the state's five managed care plans Tuesday to terminate contracts with pharmacy benefit managers using “spread pricing,” a secretive pricing method, and move to a more transparent pass-through pricing model effective Jan. 1 (Source: “Ohio firing pharmacy middlemen that cost taxpayers millions,” Columbus Dispatch, Aug. 14, 2018).

"It will provide volumes of transparency," said Patrick Stephan, director of managed care for the Department of Medicaid. “The black box will effectively be eliminated.”

The state's leading PBM, CVS Caremark, "is working with our clients (the managed care plans) to update our contracts moving forward," said company spokeswoman Christine Cramer. CVS uses pass-through pricing in several other state Medicaid programs.

Auditor Dave Yost on Thursday released the results of a separate investigation that concluded that the state should hold off on changes to PBM contracts (Source: “Ohio Medicaid drug audit calls for transparency, highlights pharmacy closures,” Columbus Dispatch, Aug. 16, 2018).

"I'm not sure that the remaining cost controls in the long term will be effective and that's why I'm calling for today a freeze for a few months and a robust analysis," Yost told the Joint Committee on Medicaid Oversight. "We would be foolish indeed to discard the current system, which is providing some measure of cost control, for greater transparency — but significantly higher costs."


Medicaid PBM report to stay secret for now, judge rules

Plans to release a report documenting the costly practices of pharmacy middlemen were shelved by Ohio Medicaid officials on Tuesday at the request of a judge reviewing claims by CVS Caremark that the analysis contains confidential information and trade secrets (Source: “Report on pharmacy middleman pricing to stay secret -- for now,” Columbus Dispatch, July 17, 2018).

Franklin County Common Pleas Judge Jenifer French asked for the delay to allow CVS Caremark time to identify information in the 51-page report that it considers proprietary and believes should be redacted before the report is released to the public and lawmakers.

French did not rule on CVS’ request for a temporary restraining order to block the report's planned release late Tuesday afternoon. Instead, she ordered Medicaid and CVS officials back to court on July 25 after they’ve had a chance to discuss the concerns. She also asked to privately review a copy, which shows higher-than-industry costs paid by taxpayers to cover Medicaid patients' drugs.


Ohio House committee hears from supporters of prescription price transparency bill

Calls intensified this week for the General Assembly to force more transparency from pharmacy middlemen accused of billing Ohio’s Medicaid managed-care plans for much more than they reimburse pharmacists (Source: “Ohio legislators hear support for bill seeking transparency in prescription pricing,” Columbus Dispatch, April 10, 2018).

Ten witnesses — cancer patients, representatives of national consumer groups and others — appeared before the House Government Accountability and Oversight Committee to testify in favor of House Bill 479, which would require that pharmacy customers be told about and receive the cash price for medicine whenever it’s cheaper than an insurance co-payment.

Ohio pharmacists have said that their contracts with pharmacy-benefit managers in some cases include clauses that prohibit them from telling customers that the cash price for drugs is cheaper than their co-payments.

The Ohio Department of Insurance ordered the PBMs last week to stop enforcing any gag rules. But Heather Free, pharmacy director for the nonprofit Equitas Health, told the committee on Tuesday that the legislation it’s considering remains essential “to ensure that PBMs do not engage in the harmful clawback practice.”

Pharmacy-benefit managers say they negotiate better prices from drugmakers and pharmacies than customers would otherwise receive.


Ohio voters reject drug price initiative

Ohio voters rejected a proposal Tuesday that sought to curb prescription drug prices paid by the state (Source: “Ohio voters reject Issue 2 ballot measure to curb prescription drug prices paid by state,” Akron Beacon-Journal, Nov. 7, 2017).

The pharmaceutical industry spent an estimated $70 million to oppose Issue 2, the Ohio Drug Price Relief Act, saying it would reduce access to medicines and raise prices for veterans and others. Supporters, led by the California-based AIDS Healthcare Foundation, spent close to $17 million in support, saying it would save the state millions of dollars and could force the industry to reduce prices elsewhere.

The measure would have required the state to pay no more for prescription drugs than the Department of Veterans Affairs’ lowest price, which is often deeply discounted.


HPIO releases resource page on drug pricing ballot initiative

The Health Policy Institute of Ohio has released a resource page with information on the upcoming statewide drug pricing ballot initiative.

On Nov. 7, 2017, Ohioans will vote on Issue 2 – a ballot initiative that would require state agencies and programs to purchase prescription drugs at prices no higher than what the U.S. Department of Veterans Affairs pays for the same medication.

The resource page includes background information on the ballot language, links to news stories about the issue and a collection of research and analysis on drug pricing.