Capitol Insider: PBMs might escape fallout for drug-pricing tactic due to its complexity

Imagine you run across a multimillion-dollar scheme that could both violate Ohio law and rip off taxpayers.

Now imagine the plot is just too complicated to completely unravel, meaning the suspected violators go unpunished and Ohioans are never made whole.

Welcome to Maureen Corcoran's nightmare.

After taking several months to decide whether to pursue questionable maneuvers by pharmacy benefit managers — middlemen in the prescription drug supply chain — the Ohio Medicaid director is now raising the possibility that a new state probe may not get to the bottom of the mess.

At issue is money the PBMs "claw back" from pharmacies across the U.S. weeks or months after a state considers a Medicaid prescription adjudicated — the technical term for a closed transaction. Clawbacks are allowed in "generic effective rate" contracts offered on a take-it-or-leave-it basis by the major PBMs, which control nearly 80% of the market.

But the after-the-fact clawbacks mean a state not only has falsely inflated drug payments on its books, but also throw off all calculations based on that false information — including the amount taxpayers are assessed for the federal-state health insurance program for the poor and disabled.

Corcoran acknowledges that could amount to untold billions of taxpayer overcharges nationwide.

Since Ohio has enacted a ban on such clawbacks, and Medicaid requires transparent drug pricing, the ongoing investigation has legal as well as financial implications.

But here's the potential difficulty: It's looking like PBMs use effective rate contracts not just for Medicaid patients, but also for people who have health insurance through their employer — a category that includes about half the country's population.

If all those public-private dealings are woven together across most or all of the U.S., how can Ohio or any state untangle the knot, Corcoran wonders.

"As we understand right now, the effective rate contracts tend to be executed at national levels across multiple lines of business. So what we're not sure is how that impacts the specific Medicaid line of business.

"And that's where the ambiguity starts to come, how that translates into Medicaid-specific implications."

Medicaid director: If state finds 'a dead body in the road,' it will take action

Medicaid launched its investigation in January with a detailed series of questions for the private managed-care organizations that hire PBMs to help administer drug payments for more than 3 million disabled and low income Ohioans. Specific queries about clawbacks are among those items.

Responses were returned by the Jan. 28 due date, but with expected follow-up inquiries and additional back-and-forth, a final analysis is not expected for several weeks, Corcoran said.

Even if the department manages to ferret out solid information, the director faces a crucial decision: What then?

"If as a result of this we find that there's what I call 'a dead body in the road' ... we'll do something about it," she pledged.

But if it's just deemed a "stone in the road," Corcoran said the agency may simply concentrate on the July 1 implementation of its much-anticipated single PBM overseen by the state — putting clawbacks in the rear-view mirror.

New rankings: Ohio now next to next to last in country for COVID safety

You probably saw the Gannett USA Today Ohio bureau's story Wednesday that the Buckeye State leads the nation in COVID deaths per capita, per data compiled by the New York Times. Only 57% of Ohioans are fully vaccinated, vs 64% in the entire U.S.

In October we ran a column item showing financial firm Wallethub's ranking of Ohio as more dangerous for COVID than all but four other states.

Updated results were released in late January, but Ohio fared even worse. Only two states were less safe — Indiana and Oklahoma.

Ohio's latest rankings in individual areas among all 50 states and Washington D.C.:

44th – Vaccination Rate

23rd – Positive Testing Rate

44th – Hospitalization Rate

49th – Death Rate

Even if Ohio Democrats win more friendly maps, can they beat GOP?

Last week we pointed to Monday's key campaign finance filing deadline, a major milestone for establishing a campaign's credibility.

Perhaps the most stunning figure was the $30 million poured into their own campaigns from the personal bank accounts of Republican hopefuls seeking lame duck Rob Portman's U.S. Senate seat, as documented by the Ohio bureau.

Florida GOP Sen. Rick Scott appears to hold the individual record, popping almost $64 million of personal funds into his successful 2018 campaign. That topped the $60 million Democratic financier Jon Corzine slid into his winning 2000 Senate contest in New Jersey.

Perhaps the most intriguing figures stemmed from state legislative races, where GOP campaign organizations maintained the financial advantage they have enjoyed for years by raising 10 times as much as Ohio Democrats, cleveland.com reported.

That reality raises a couple of key questions:

Can Democrats get Statehouse donors to flip, allowing the party to eat into that whopping dollar deficit, if they win a more friendly map in their lawsuit before the Ohio Supreme Court?

Or will the GOP maintain its traditional cash dominance, allowing them to win seats even in districts not as heavily gerrymandered to benefit its candidates?

First, however, if Republicans lose again with the high court, some tough calls must be made to essentially determine which incumbents get tossed overboard into more competitive districts.

Past legislative leaders have talked about how the biggest pressure they feel during the intense redistricting process often comes from current lawmakers and members of Congress in their own party seeking even safer districts.

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