Ohio Medicaid Department Directed to Quit Its PBM Contracts

It seems like this has been a long time coming but at least one set of state officials is taking action regarding the excess profits and business model of their pharmacy benefit managers (PBMs) (see: Ohio Medicaid to try out transparent PBM pricing model). Below are some details from the article:Ohio's Medicaid department is directing its managed-care organizations to quit their contracts with pharmacy benefit managers because of opaque pricing practices officials said cost the state millions of dollars. The state's five managed-care plans must strike up new contracts with companies able to manage pharmacy services using a more transparent pricing model by Jan. 1, 2019.The decision comes after an analysis commissioned by the Medicaid department found that the two largest PBMs operating in the state — CVS Caremark and OptumRx — billed managed-care plans $223.7 million more for prescription drugs than they paid pharmacy providers in one year under a practice known as"spread pricing." Pharmacy benefit managers are middlemen that administer pharmacy benefits and negotiate prescription drug rebates from manufacturers on behalf of insurers and self-insured employers.They also negotiate discounts from pharmacy networks that dispense drugs to patients. Most PBMs engage in spread pricing, where the PBM pockets the difference between what it bills to the payer for medications and what it pays the pharmacy to dispense those drugs. PBMs keep that figure close ...
Source: Lab Soft News - Category: Laboratory Medicine Authors: Tags: Cost of Healthcare Healthcare Business Healthcare Insurance Medical Consumerism Medical Ethics Source Type: blogs