New Year will not heal all ills for Ohio Medicaid drug pricing

If you were expecting the New Year to herald a drastically new prescription-drug plan for Ohio’s Medicaid program, we’re sorry to burst that bubble just as 2019 begins.

Delay is now the watchword, and it’s disappointing that Ohio is not moving toward a more simplified and transparent system sooner.

One bright spot, though, is the plan of state Medicaid officials to adopt a new pass-through model for how prescription drugs are paid in the Ohio Medicaid managed-care program, which is on track to become reality with the turn of the calendar to 2019.

The elimination of so-called “spread pricing” has been a long time coming. Spread pricing is the opposite of the pass-through system; the spread allowed pharmacy benefit managers to keep secret how much they paid pharmacies for filling prescriptions, making it impossible to see what they were pocketing after billing the state for drugs.

The death knell for this greed-inspired practice came shortly after the Department of Medicaid released a report in July showing that two PBMs servicing the five Medicaid managed-care plans in Ohio were able to grab profits three to six times the industry standard in that price spread and through negotiated rebates.

Whether the state could have discovered the excessiveness of the PBMs’ profit-taking much sooner is unknown, but at least Medicaid officials have derailed that practice.

It will be replaced today with a system in which pharmacies will be paid exactly what PBMs bill the state to provide prescription drugs to Medicaid beneficiaries, with PBMs receiving an administrative fee for each transaction. PBMs also must disclose — for the first time — if they receive rebates or other incentives from drug manufacturers.

While that new direction is positive, it is disturbing that Medicaid has abandoned, with insufficient explanation, a long-planned transition to a unified preferred-drug list that also was to begin today and which had been hailed as promising to save taxpayers $42 million over two years.

As recently as October, the department planned to create a single list of medications that beneficiaries could receive without prior authorization —something it already has for many Medicaid beneficiaries in nursing homes.

In reversing that strategy this month, Medicaid officials said only that they want to “concentrate our efforts” in other areas, which is hardly a satisfying answer.

State Sen. Dave Burke, R-Marysville, a pharmacist and chair of the legislature’s Joint Medicaid Oversight Committee, offered a more realistic assessment — that the department “ran the numbers and realized it might not have the impact they thought it would.”

Transparency works both ways. As Medicaid insists on clear pricing, it should also explain suddenly rejecting a long-planned change of direction.

Meanwhile, a Franklin County judge has extended until April a legal battle between Medicaid and Ohio’s two Medicaid PBMs, CVS Caremark and OptumRx, over publicly releasing blacked-out data in the report showing Ohio has overpaid the PBMs. The PBMs’ fight to keep its past pricing private does not inspire confidence that the state should continue doing business with them.

Concurrently, a federal judge in Washington, D.C., is weighing the $69 billion merger of CVS Health with insurance giant Aetna. Given CVS’ dealings here, we’re glad the judge is giving antitrust issues careful consideration.

— The Columbus Dispatch

CREDIT: THE COLUMBUS DISPATCH