2018 was a key year for further shedding light on Pharmacy Benefit Manager (PBM) business practices. As state budgets continue to be squeezed and patient populations require more specialty care, state Medicaid Directors have an opportunity to pull back the curtain on PBMs and realize additional ways that your state can benefit from transparency.
An important lesson can be learned from Ohio’s 2018 successes. In a report to the Ohio Joint Medicaid Oversight Committee, the Ohio Auditor gave an overview of the audit of the state’s Medicaid program and its dealings with PBMs.
The report found:
∙ The “spread”- difference in dollar amount between what Plans pay to PBMs and what PBM pay to pharmacies- has been growing and hit its peak in the fourth quarter of 2017
∙ An overwhelming portion of PBM spread is occurring on generic drugs
∙ Spread pricing totals varied wildly from region to region
∙ There is a disconnect between the Medicaid drug spend and what PBMs reimburse to pharmacies
∙ Data confirms a high number of pharmacy closures amid reimbursement cuts
∙ Spread totals were highest on specialty drugs, which are typically dispensed at PBM-owned pharmacies
The Ohio audit report concludes that PBMs enjoyed an 8.8% spread on Medicaid beneficiary claims, yielding PBM profits in excess of $250MM—that’s just in Ohio state Medicaid. Ohio decided that it would no longer permit PBM spread pricing and now requires PBMs to have pass through model contracts.
Frier Levitt Government Affairs, LLC (FLGA) and Frier Levitt, LLC, have extensive experience working with Medicaid Directors and other stakeholders to provide money saving solutions against PBMs. For Medicaid Directors witnessing population growth, we can help unravel savings from complex PBM contracts and relationships. We can assist your state in reviewing your Medicaid contracts to determine if you are paying too high for negotiated items. We can also provide you with substantial education on the PBM business model with the goal of saving your program much needed resources. Contact us today to put an end to questions and confusion and start requiring accountability from your PBM.