DeWine tells Ohio’s pharmacy middlemen he’s ready to sue them

Ohio Attorney General Mike DeWine is ramping up his investigation into the costly practices of pharmacy middlemen, hiring outside counsel to assist with a probe he expects to lead to litigation against companies managing drug benefits for Medicaid and other tax-funded health insurance programs.

“Today, I am putting (pharmacy benefit managers, known as) PBMs on notice that their conduct is being heavily scrutinized, and any action that can be taken and proven in court will be filed to protect Ohio taxpayers and the millions of Ohioans who rely on the pharmacy benefits provided,” DeWine said.

“Just as Ohio and other states have taken previous action against PBMs in other matters, Ohio will not hesitate to be the first state to demand accountability from PBMs for this pattern of conduct.”

DeWine said his office began the process of hiring outside counsel to assist in potential civil litigation and expects to soon announce its selection.

The attorney general also is defending the Department of Medicaid against a lawsuit filed last week by CVS Caremark, PBM for four of Medicaid’s five managed care plans. CVS has asked a judge to block the release of a report documenting its billing practices, claiming the analysis contains confidential information and trade secrets.

“Since the end of 2017, my office has been reviewing and investigating issues regarding PBMs and their contracts with Ohio agencies, such as the Ohio Department of Medicaid, the Ohio Bureau of Workers’ Compensation, the Ohio Department of Administrative Services, and our numerous pension systems,” DeWine said.

“It is clear that the conduct by PBMs in these areas remains a major concern, and we anticipate that our investigation will result in major litigation against PBMs.”

DeWine’s opponent in the 2018 governor’s race, Democrat Richard Cordray, wasn’t impressed.

“We have seen this movie before. Mike DeWine has slept over these problems, in some cases for years,” Cordray said in a reference to the opioid crisis and the Electronic Classroom for Tomorrow charter school scandal.

“Now that he’s a few months from the governor’s election, at a time when he knows darn well he can’t complete any work on these lawsuits, he’s grandstanding for political purposes when he should have been working to solve the problem years ago,” Cordray said.

The Democrat said as governor he would recraft pharmacy benefit manager contracts to control costs, impose transparency and better protect taxpayers and Medicaid patients.

“We need to rein in PBMs and make sure the grotesque disparities in reimbursements are reviewed and reformed,” he said.

According to the Medicaid consultant report’s executive summary, pharmacy benefit managers, or PBMs, billed taxpayers $223.7 million more for prescription drugs in a year than they reimbursed pharmacies to fill those prescriptions.

That 8.8 percent difference, known as the price spread, represents millions kept by CVS Caremark, PBM for four of Medicaid’s five managed care plans, and Optum Rx, the PBM for the other. Largely pass-through operations, PBMs are employed to negotiate drug prices with manufacturers and process drug claims.

The study said PBM fees should be in the range of 90 cents to $1.90 per prescription. CVS Caremark billed the state about $5.60 per script; Optum charged $6.50 — three to six times higher.

Dispatch reporter Randy Ludlow contributed to this story.

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CREDIT: CATHERINE CANDISKY