Columbus — This could be one of the biggest blows in the country to the companies that manage our prescription drug prices.
Ohio is canceling its current Medicaid contracts with the middlemen who negotiate drug prices with Manufacturers, and forcing them to change the way they do business.
These middlemen, known as Pharmacy Benefit Managers, or PBMs, basically control what the consumers, pharmacists and insurers like the State pay for their drugs.
The biggest in Ohio is CVS Caremark, which runs four of the State's five Medicaid Managed Care Plans. After an audit conducted by State Auditor Dave Yost it seems we are being overcharged. And as they say, that party's over, as the State could be cutting off that billion dollar business at its knees.
"Ohio has an unprecedented view into the shell game that's going on in prescription drug transactions," says Antonio Ciaccia of the Ohio Pharmacists Association.
Unprecedented, because the drug prices, negotiated by those middlemen have been kept secret until now.
A recent report by our State Auditor on the fees charged by PBMs, found that Ohio Medicaid was billed $223.7 million more for drugs, than the PBMs reimbursed Pharmacies to fill those prescriptions.
It claims that those savings were pocketed by the PBMs, something they deny. And that practice, called "Spread Pricing" killed competition because it gave preferred treatment to Pharmacies the PBMs own.
Ciaccia says, that by favoring their own pharmacies, PBMs essentially forced 370 independent pharmacies out of business over the past five years.
The result, "You have entire towns that have lost their pharmacies, and patients have to cross state lines to get access to their medications," he explained.
“Spread Pricing” sometimes affects the prices non-Medicaid customers pay as well, since PBMs have also been accused of not passing price savings on to Insurers. As a result, Insurance companies charge "us" higher deductibles or co-pays.
Barbara Guzman, who spends much or her money on medications says,
"We're getting older. We're thinking of retirement and retirement will never be a possibility.”
Her prescriptions run her more than $700 dollars a month, and Medicare doesn't nearly cover the cost.
"It's caused a lot of changes in our lives," she tells us.
But Ohio's move may be a sign of big changes to come for all patients, who will hopefully benefit from the potential savings.
According to Ciaccia, depending on what the State decides to do, "You could take the money and put it into programs that have been cut. Or you could take the money and put it into treatments not being covered."
Now, if CVS Caremark changes its pricing model to bill the State the same amount is pays pharmacists, while charging a separate administrative fee, the State could continue its relationship with the Company.
Click here to view statement from CVS Caremark.
Click here to view the State Auditor’s Report: