States Question Costs Of Middlemen That Manage Medicaid Drug Benefits

DATE: August 8, 2018

Published by NPR

Several states are questioning the cost of using pharmacy middlemen to manage their prescription drug programs in a movement that could shake up the complex system that manages how pharmaceuticals are priced and paid for.

The debate is playing out this week in an Ohio courtroom, as the state fights to release a report detailing what it paid two middlemen, CVS Health and Optum, to manage its Medicaid program’s prescription drug plans.

The report shows that the companies charged the state 8.8 percent more than they paid to pharmacies to fill prescriptions. The companies kept the more than $224 million difference between what they charged the state and paid for the drugs.

“I would love to tell you that 8.8 percent is too high, too low, or normal, but I’m really unqualified to say that because our state Medicaid program is the first state in the country to really get this level of transparency into how this works,” says Antonio Ciaccia, the director of government affairs for the Ohio Pharmacists Association.

But he added, “I think 8.8 percent is insane.”

Ohio’s Medicaid program is run almost completely through private managed care insurance companies. Those companies in turn contract with CVS Health and Optum to manage the prescription drug portion of recipients’ coverage. The companies — known as pharmacy benefit managers, or PBMs — negotiate discounts from drugmakers and work hard to keep the prices they actually pay secret.

Click here to see the original article on the NPR website.