Columbus Ohio Dispatch analysis: State's attempt to curb drug middlemen mostly futile

An analysis of more than 400,000 prescriptions from about three dozen pharmacies across the state in the first quarters of 2018 and 2019 produced four major conclusions:

• Ohio's largest Medicaid pharmacy benefit manager, CVS Caremark, increased its rates for specialty drugs at the beginning of this year, even though the cost of many of them was dropping nationally. Along with raising the price for Ohio taxpayers, CVS benefits from the inflated cost because its PBM directs many of these prescriptions to CVS specialty-drug pharmacies. The price increases took effect as Ohio eliminated the old "spread pricing" system in which pharmacy benefit managers, a middlemen in the drug supply chain, walked away with as much as $200 million a year in profit.

• The state's new "pass through" system has generated better results for Ohio pharmacists. The amounts they are receiving from PBMs above the pharmacies' costs to buy Medicaid drugs more than tripled after the sweeping changes this year. The bad news: That $6.25 margin per prescription still falls well short of the standard $9.48 deemed by pharmacies as their break-even point.

• CVS Caremark's reimbursements to Ohio pharmacies for Medicaid prescriptions are well under half those of the other pharmacy benefit manager handling Ohio Medicaid money, UnitedHealth Group's OptumRx. Many of CVS' reimbursements fluctuated wildly from year to year for the same drug, seemingly without relation to the actual cost of that drug.

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Our Comment

It is reports like this, and analyses, that confirm the states and self-insured employers must look for PBMs that have no conflicts of interest and are committed to act always in the clients' best interests.

Despite Ohio's best efforts to decrease prescription costs for their tax payer funded programs, there is no good evidence that those goals have been met. The traditional PBMs that they continue to trust are publicly traded companies and are owners of, or are owned by, pharmacies. They have massive conflicts and are beholden to their shareholders and corporate profits.

WellAdvisedRx Guarantee:

We promise to utilize fiduciary standards and eliminate conflicts of interest.We promise to return all manufacturer revenue; including rebates, network discounts and all other manufacturer incentives, to the plan.We promise to charge a single administrative fee. 

Fiduciary, Definition:

"Integrity and fidelity, a duty to act always in the client’s best interest. Always exercising scrupulous good faith and candor. Simply put, fiduciaries must exhibit the highest form of trust and fidelity.”

Will you continue to accept the status quo and allow your PBM to profit at your expense? 

Burk FitzPatrick

(484) 645-5612

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