State ending deals with pharmacy middlemen that cost taxpayers millions

Source: Catherine Candisky and Lucas Sullivan, The Columbus Dispatch, August 14, 2018

The Ohio Department of Medicaid is changing the way it pays for prescription drugs, booting all pharmacy middlemen because they are using a secretive pricing method that has cost taxpayers hundreds of millions. Medicaid officials directed the state’s five managed care plans Tuesday to terminate contracts with pharmacy benefit managers using a practice called “spread pricing” and move to a more transparent pass-through pricing model effective Jan. 1.

… The announcement comes after more than 40 stories by the Dispatch this year investigating the mysterious practices of little-known pharmacy benefit managers, or PBMs, that make nearly $400 billion a year as part of the country’s health care system. CareSource, Medicaid’s largest managed care plan, will soon seek bids on a new transparent contract to comply with the directive, said company vice president of pharmacy, James Gartner. The state’s leading PBM, CVS Caremark, “is working with our clients [the managed care plans] to update our contracts moving forward,” said company spokeswoman Christine Cramer. CVS uses pass-through pricing in several other state Medicaid programs. …