The Article Below Was Published by The Columbus Dispatch
Medicaid chief quietly drops bombshell: Millions obtained by PBMs unaccounted for by state
That’s because the PBMs are collecting controversial cash “clawbacks” from pharmacies after the state has closed its books on prescription-drug purchases for more than 3 million poor and disabled Ohioans, Medicaid Director Maureen Corcoran acknowledged Wednesday before a legislative watchdog panel.
So the actual cost of hundreds of thousands of Medicaid drug transactions as recorded by the state and reported to the federal government in recent years is inaccurately inflated.
Not only that, but PBMs also are violating at least the intent and spirit of an Ohio law banning clawbacks, as well as a measure mandating pass-through pricing, Corcoran said. The latter requires PBMs to charge the state the same price they pay pharmacists to fill a prescription for a Medicaid recipient.
After the Joint Medicaid Oversight Commission meeting, Corcoran added another revelation: The data on which Ohio Medicaid relies to set its payment rates — including how much state and federal taxpayers are assessed — likely are wrong as well.
Could virtually all Medicaid drug cost data across the U.S. be wrong as well?
When The Dispatch wrote in July about the impact on Americans’ health care from clawbacks, Corcoran said they wouldn’t affect these costs, known as capitation rates. That’s because the state’s consultant didn’t use the Ohio Medicaid’s faulty drug cost figures.
However, Corcoran acknowledged Wednesday that the consultant merely used similar data from other states — all of which are likely inflated by clawbacks as well.
“It’s skewing the entire economic dynamic,” she said. And she raised the issue of whether “the entire industry (is) so contaminated” that Medicaid prices may be wrong all over the country.
And yet, the PBMs may be meeting the letter of the Ohio requirements.
“Technically, they’re doing what they’re supposed to do,” even if “they’re not satisfying the spirit of it,” Corcoran said.
“Technically, they’re not doing anything wrong, but it is wrong.”
Antonio Ciaccia, former lobbyist for the Ohio Pharmacists Association and now president of drug price watchdog 3 Axis Advisors, said afterward, “This week’s hearing confirmed what we already knew: PBMs have used a more evolved and complicated form of pricing gymnastics to inflate prescription drug costs to the state Medicaid program and beyond. Yet again, Ohio is leading the way in exposing and repairing a fundamentally broken system.”
Pharmacists: PBMs’ near-monopoly gives them power to dictate contracts
Wednesday’s meeting of the Medicaid oversight panel — a rare legislative committee that includes members from both the Senate and House — centered on suspected “fraudulent” actions by PBMs, which act as middlemen in the prescription drug supply chain.
The central issue: PBMs can “claw back” additional revenue from the pharmacy if the PBM determines that it didn’t receive enough money initially. Pharmacists, some of whom already are financially beleaguered, say they can’t afford an additional, unexpected hit that takes away as much as 50% of their annual profit.
“PBMs have continued to game the payment system to ensure that they remain quite profitable,” testified Ernie Boyd, executive director of the Ohio Pharmacists Association. “The pricing fiasco engineered by PBMs is literally destroying our network of pharmacies.”
Eric Geyer, pharmacy director of the Centers for Families and Children, told committee members, “After the 2018 investigation that showed how much the Medicaid system was abused by these PBMs, I guess we sadly shouldn’t be surprised that they would stoop to different interpretations to benefit their bottom line at the expense of others, including those patients they are supposed to serve.”
The PBMs say they are not engaging in clawbacks, but simply following the terms of the “effective rate” contracts that local pharmacies use to obtain prescription drugs.
Pharmacists counter that PBMs can dictate the terms of those contracts since they essentially are a monopoly. That means pharmacy owners must either take the deal offered by the PBMs or surrender the ability to provide prescription drugs for a virtually all of their customers.
Three PBMs control more than 75% of the U.S. market, and they stand among the largest corporations in the U.S. CVS Health (parent of CVS Caremark, a PBM) ranks 4th on the Fortune 500; PBM Optum’s parent company, UnitedHealth Group, is right behind that at 5th; and Cigna, parent of the PBM Express Scripts, comes in at No. 13.
‘We intend to hold them accountable’ says lawmaker on pharmacy benefit mangers
Corcoran delivered her bombshell Wednesday in such an obscure fashion that some might have missed its significance.
In response to questions from Cincinnati-area Republican Scott Lipps, she told lawmakers that “all machinery within this supply chain looks at the ‘claim’ as the point when the reporting stops.”
The legislature declared clawbacks illegal in July 2019. The law says no PBM “shall retroactively adjust a pharmacy claim for reimbursement for a prescription drug” except to fix a technical error or respond to an audit.
“Claim” is the key word of that statute. Corcoran said that since clawbacks by their very nature come retroactively after a “claim” is supposedly finalized, the law may not apply.
Reps. Thomas West, a Canton Democrat, and Lipps co-sponsored the PBM clawbacks ban.
“We intend to hold them accountable,” said West. He had touted the 2019 measure as “a big win in the fight against PBMs and to hold PBMs accountable for drug costs.”
Corcoran said her agency is still seeking to get to the bottom of whether the PBMs’ practices are illegal or whether they indeed are squeezing through loopholes in Ohio law.
She expressed hope many of the PBM problems that have plagued the department for years will disappear after the state sets up its own PBM in July 2022 to oversee the Medicaid program. And taxpayers should reap the benefits.
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