An ongoing investigation on the rising costs of prescription drugs
The Dispatch has spent the past year uncovering how PBMs operate in Ohio and the rest of the country. Here's what you need to know from our investigation.
Pharmacy benefit managers (PBMs) - little-known middlemen in the supply chain that gets prescription drugs from manufacturers to consumers - receive hundreds of millions from Ohio taxpayers via the state’s Medicaid program.
A state-sponsored study conducted after several weeks of Dispatch stories found the PBMs are charging Ohioans 3 to 6 times the normal rate - costing taxpayers an extra $150 million to $186 million a year.
The PBMs use “spread pricing,” meaning they get about $225 million more a year from the state than they reimburse pharmacies for drugs used by Ohio’s poor and disabled.
At the same time the payments to pharmacies were being cut by the PBMs, the parent company of one of them, CVS, sent out letters to pharmacy owners sympathizing with their financial woes and offering to buy them out. This occurred in several states.
PBMs cut the reimbursement rate so much for Suboxone that many pharmacies were forced to stop stocking the drug used by numerous Ohio addicts in recovery.
The Medicaid official who was in charge of dealing with pharmacists who complained about low reimbursements from CVS’s PBM was at the same time, she was a part-time pharmacist with CVS Pharmacy. While still on the job at Medicaid, she negotiated a new job with CVS Caremark, the company whose reimbursements Ohio pharmacists were complaining about.
Ohio Medicaid officials don’t want to follow the example of West Virginia, which eliminated PBMs and saved $38 million, saying it would actually cost the Buckeye State more. Medicaid also is not following the example of the Ohio Bureau of Workers’ Compensation revamp of its prescription drug setup, with one BWC official saying “we were being hosed” under the previous deal.
The city of Columbus wound up doling out $8,000 a prescription for a pain cream that drug salespeople marketed as “free” to individual members of safety forces.
People diagnosed with cancer sometimes must wait weeks to get medication because PBMs required it to be provided by their company’s own mail-order facility, instead of having the patient get it down the hall in the same facility where they were diagnosed.
Rebates drive up the cost of prescription drugs, although their exact impact is cloaked.
A state proposal to provide HIV drugs seems to have been written so that only CVS could get it
The proposed merger between CVS and health-insurance giant Aetna would further consolidate the health-care market and, analysts say, drive up prices for consumers.
Dispatch analysis shows "cost cutting" middlemen reap millions
Ohio experience raises questions about CVS-Aetna merger
Ohio firing pharmacy middlemen that cost taxpayers millions
Amid PBM inquiry, officials' ties to CVS questioned
DeWine wants crackdown on pharmacy middlemen, managed-care groups
Feb. 1, 2019
Frustrated by the ongoing “rip-off" of Ohio taxpayers, Gov. Mike DeWine ordered a crackdown on Medicaid managed care plans and the pharmacy benefit managers they hire to oversee prescription drugs.
DeWine directed Medicaid Director Maureen Corcoran to rebid the managed care contracts and also ordered Medicaid and other state agencies to provide any pertinent data to Attorney General Dave Yost for a potential lawsuit against the pharmacy middlemen, known as PBMs.
“I want to save taxpayer dollars. It’s pretty simple. The PBM system we think has ripped us off," DeWine said Friday.
The governor said he wants to make certain going forward that "we have the right contract and ... we require openness in regard to this whole PBM process. I think the thing the public should find very irritating and very alarming is the secrecy surrounding the PBM process.
"We want to shine a light on that."
DeWine's directives come less than a month into his term as governor and follows an investigation into the costly practices of PBMs he launched last summer while attorney general. His successor, Dave Yost, issued this statement:
“We are actively looking into the PBM business practices and drug pricing. Litigation is never my first choice but justice is. If the state of Ohio claims are supported by evidence we have the tools and will aggressively work to recoup the money that is owed.”
Medicaid — the tax-funded health insurance program covering 3 million poor and disabled residents — contracts with five private managed care plans to oversee benefits. The plans have hired two PBMs, CVS Caremark and OptumRX, to decide which medications are covered, negotiate drug prices and rebates with manufacturers, and set reimbursement rates to pharmacists who fill prescriptions.
Separately, new Ohio House Speaker Larry Householder said lawmakers will closely scrutinize both managed care organizations and pharmacy benefit managers.
"I can tell you that I’m always going to be very, very concerned that tax dollars are spent the way they are supposed to be spent. And I can tell that I’m very concerned about MCOs, and I’m very concerned about PBMs," the Glenford Republican told Statehouse reporters.
"I think that’s something that we’re going to look at hard … at the way those dollars are allocated back to the systems and make sure they’re being done effectively and efficiently. I’m worried that there’s money being lost in the system.”
A study commissioned by Medicaid last year found 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 as much as $180 million in excessive profit kept by CVS Caremark and Optum Rx, the study found.
The report said PBM fees should be in the range of 90 cents to $1.90 per prescription, but found CVS Caremark billed the state about $5.60 per script while Optum charged $6.50 — three to six times higher.
In response, then-Medicaid Director Barbara Sears told the managed care plans last summer to abolish "spread pricing," and starting Jan.1 implement a more transparent pass-through pricing model in which PBMs are paid a set fee per transaction and required to pay pharmacists the same amount they bill the state.
But DeWine said Medicaid can do better and that entire managed care contracts, which are six years old, need to be re-bid.
“It’s time to re-look at these contracts, re-evaluate exactly what we want in the contract. We want to make sure there’s a very strong wellness component (but) the PBM is one of the significant reasons to do this,” DeWine said.
“We certainly can get a better deal for taxpayers than we have now, particularly in regard to the PBMs … there’s no doubt about it … the more I found out as attorney general the clearer it was that the status quo is not acceptable.”
DeWine said when he was attorney general "none of the (state) agencies authorized litigation," something he needed before filing a lawsuit.
“As governor now, I’m in a different position. I determine the policy. The policy is we are asking the attorney general if litigation can be filed. They have to tell us if that is possible.”
DeWine declined to speculate on the focus of potential litigation.
“We think there are tax dollars to be saved," DeWine said. "We feel very strongly we can get a better deal.”
Medicaid spokesman Tom Betti said “consistent with the governor’s directive, we are immediately moving forward with the re-procurement process of our managed care plans. We look forward to an open discussion with many of our consumers, advocates, and partners to explore innovative ways to improve the quality of services and care to those we serve, as well as securing the best deal for Ohio taxpayers.”
John Corlett, former Ohio Medicaid director, tweeted, "Glad to see that @OhioMedicaid is moving to re-procure their Medicaid managed care contracts, it’s an important step forward on many levels."
Mike DeAngelis, senior director of corporate communications for CVS Health, said, "As of January 1, 2019, the contracts with our managed Medicaid clients in Ohio have been updated to comply with the state’s pass-through requirement. CVS Caremark remains focused on continuing to reduce health care costs and improve health outcomes in Ohio, as evidenced by Ohio Department of Medicaid’s report that PBMs have saved taxpayers $145 million annually."
That total actually is the amount the state consultant calculated that Ohio saves by using managed care instead of fee-for-service (although rebates were not included in the calculation), a savings PBMs take full credit for since they help manage managed care.
Dispatch Public Affairs Editor Darrel Rowland contributed to this story
Trump administration defends CVS merger, but ignores Ohio’s experience
Feb. 14, 2019
President Donald Trump has vowed to take on pharmacy middlemen, but his Justice Department has downplayed the concerns raised in Ohio about one of the biggest: CVS Caremark.
Lawmakers resume push for transparency, end to gag rules by pharmacy middlemen
Feb. 12, 2019
Two state legislators are moving quickly to take care of unfinished business in state efforts to crack down on the costly practices of pharmacy benefit managers.
Reps. Scott Lipps, R-Franklin, and Thomas E. West, D-Canton, have reintroduced legislation aimed at lowering prescription drug costs by increasing price transparency for both consumers and pharmacists.
Analyst: State's new drug setup still riddled with loopholes
Feb. 10, 2018
Gov. Mike DeWine is working to close loopholes that he says enabled pharmacy middlemen CVS Caremark and OptumRx to overcharge Ohio taxpayers as much as $180 million a year. But if that's to work, some experts say, he'll have to do better than the state Medicaid program did under his predecessor, John Kasich.
Trump's move on drug rebates good but may not lower prices, experts say
Feb. 5, 2019
The Trump administration's move last week to shine more light on the actions of pharmacy supply-chain middlemen was welcomed by many who have been critical of the not-so-transparent industry.
But, they warn, it's not nearly enough to fix the problem.
The proposed rule would no longer shield the middlemen, known as pharmacy benefit managers, from federal anti-kickback laws if they keep part of the rebates they obtain from drugmakers.
Pharmacy benefit manager: Who revealed information to The Dispatch?
Feb. 2, 2019
One of the companies that serves Ohio's Medicaid program is pushing hard in its fight to keep secret the details about the $280 million that it bills taxpayers for prescription drugs each year.
In a move that sparked criticism, OptumRx said it plans to ask people under oath whether they've spoken to The Dispatch, according to court papers OptumRx filed Monday.
CVS paid itself far more than some major competitors, report says
Jan. 20, 2019
CVS used its role as a pharmacy middleman for the Ohio Medicaid program to pay some of its biggest retail competitors far less than it pays its own stores, according to a section in a state report that CVS is fighting in court to keep secret.
For example, CVS would have to pay Walmart and Sam’s Club almost half again as much — 46 percent more — for generic drugs if CVS were to equal the rates it was paying its own pharmacies, according to a copy of the unredacted report for the Ohio Department of Medicaid that was obtained by The Dispatch.
Hearing on revealing CVS Medicaid-billing data is delayed for months
Dec. 24, 2018
Important information in a report that the Ohio Department of Medicaid commissioned this year now will remain secret well into next year.
It will remain secret past the time when the legislature will consider a budget, billions of dollars of which might go to CVS, and possibly past the time when a federal judge in Washington, D.C., will decide whether to approve CVS’s $70 billion merger with insurance giant Aetna.
'PBM busters' find employers unaware of price mark-ups by drug middlemen
Dec. 23, 2018
Kyle and Ken Fields were looking for a way to honor their father and preserve the pharmacy business he spent years building.
The brothers had heard complaints from businesses and universities in southwestern Ohio about rising prescription drug costs, so they began laying a foundation for Appro Rx — their version of a pharmacy benefit management company.
Analysis: CVS makes dubious case for rebates’ impact on drug prices
Jan. 14, 2019
Health-care giant CVS says it wants to correct what it calls a “skewed” record on drug rebates. But experts and others say the story CVS is telling is the one that is skewed.
In a news release and a letter to the editor, the company said it’s a myth to say that the rebates it gets from drug manufacturers prompt those manufacturers to increase list prices. In those documents and a letter to all Ohio lawmakers, the company also has said it is returning all but 2 percent of the rebates it is collecting back to the health plans it represents.
CVS/Aetna merger may test bounds of anti-trust law
Dec. 16, 2018
The $70 billion merger between health-care giants CVS and Aetna was sailing through.
That was despite the fact that venerable organizations such as the American Medical Association had raised serious concerns that the combination would sap even more competition from an already concentrated marketplace and inflate the cost of health care even more.
Little punishment from state for CVS over improper HIV mailing
Dec. 16, 2018
The Ohio Department of Health says pharmacy giant CVS mishandled patient information in 2017 when it send out a mailing to more than 4,000 participants in a drug-assistance program that had the letters “HIV” just above patients’ names, according to communication obtained by The Dispatch through an open-records request.
Ohio's prescription plan to be more transparent in 2019
Dec. 16, 2018
Ohio Medicaid will abandon its secretive prescription drug-pricing system in three weeks and move to a transparent system that for the first time will disclose exactly how billions in taxpayer dollars are being spent.
West Virginia's system possible model for cheaper Medicaid drug prices
Dec. 16, 2018
Ohio is struggling to bring transparency to the $2.5 billion its Medicaid system spends through its managed-care plans on prescription drugs each year. As it does that, one of its neighbors decided to take a drastically different path: Cut out the plan managers altogether.
Ohio leads way as states take on 'pharmacy benefit manager' middlemen
Dec. 9, 2018
Officials in states across the U.S. showed little interest for years about looking into the black box of pharmacy benefit managers, the pharmacy supply-chain middlemen who were shrouded in secrecy and also have been pouring billions of dollars worth of prescription drug rebates into state coffers.
That setup provided states with more than $20 billion in rebates last year alone, an average of $450 million for each state that uses the so-called PBMs to help manage their Medicaid programs, a three-month national survey by The Columbus Dispatch revealed. Rebates are meant to be a price concession meant to lower drug costs.
Merged CVS-Aetna won't extend transparency, competition guarantees
Dec. 4, 2018
CVS and Aetna are making promises to Georgia that they seem unwilling to make to Ohio and the rest of the country.
The Peach State in November said it would approve the merger of the two companies only if they made guarantees regarding competition and transparency. A spokesman for CVS Health last week declined to say that a merged company would make similar guarantees in other states.
Audit shows company failed to keep drug costs low for taxpayer-funded Medicaid
Oct. 21, 2018
The health insurance group that billed Ohio twice the amount of its competitors to deliver medicine to Medicaid patients also fell significantly short of its goal to keep drug costs low.
The revelation is yet another from an audit by HealthPlan Data Solutions that was commissioned by the Ohio Department of Medicaid to determine whether the state is getting fair prices on drugs.
Richard Cordray, Mike DeWine back state Medicaid reform on prescription-drug middlemen
Oct. 22, 2018
A major reform to the way the Ohio Department of Medicaid buys billions of dollars worth of prescription drugs seems likely to continue regardless of who wins the governor's race Nov. 6.
The department, under term-limited GOP Gov. John Kasich, announced in August that it would tell the state's five Medicaid managed-care plans to update their contracts with pharmacy middlemen that allowed the middlemen to charge taxpayers $224 million a year more than they were paying pharmacies for prescription drugs. The Medicaid department conducted its investigation after The Dispatch used confidential pharmacy data to conduct its own analysis that showed somewhat higher markups.
New ‘gag rule’ ban is expected to lead to saving on prescriptions
Oct. 17, 2018
Every day, pharmacist Aaron Clark of Equitas Pharmacy in the Short North must bite his tongue and disregard what’s best for his customers.
That’s because so-called gag rules imposed by pharmacy middlemen prohibit him from telling customers how they could save money on many prescriptions by paying out of pocket instead of using their health insurance.
Ohio taxpayers may be paying twice for the same Medicaid drug services
Oct. 7, 2018
The team that discovered that Ohio taxpayers were overcharged up to $186 million for Medicaid prescription drugs last year has uncovered an additional $20 million that might have been wasted to fund services for which taxpayers already were paying.
And state Medicaid officials initially did not want that information made public.
Censored analysis confirms complaints about pharmacy benefit managers
Sept. 18, 2018
The Ohio Department of Medicaid on Tuesday released a heavily redacted report analyzing the costly practices of pharmacy middlemen in the $24 billion tax-funded Medicaid program.
The move comes as a Franklin County judge continues to mull over whether to order disclosure of the full, or unredacted, analysis of drug pricing, pharmaceutical rebates and other cost data.
State warned against pharmacy middlemen's loopholes in contract
Sept. 16, 2018
As Ohio seeks to reduce costs and bring more transparency to Medicaid’s $3 billion-plus prescription drug program, experts warn: Don’t solve one problem by creating others.
Pharmacy benefits managers, who are the middlemen in the process of pricing and paying for prescription drugs through insurance programs, are the focus of the state's attention.
Medicaid prescription transparency lauded, but Yost still has questions
August 26, 2018
The Ohio Department of Medicaid says a new plan will bring the greatest transparency in the country to its managed-care programs.
Ohio experience raises questions about CVS-Aetna merger
August 19, 2018
Health-care giant CVS and insurer Aetna are poised to merge into a conglomerate that would dominate three important links in the health-care chain.
It would combine the nation’s largest retail pharmacy group with the third-largest health insurer. It also would include the country’s second-largest pharmacy benefit manager — the middleman between insurers and pharmacies that extracts discounts from drug manufacturers, bills health plans and determines how much pharmacies are paid. Already the seventh-largest corporation in the United States, CVS estimates that, post-merger, it would move up a few notches on that list.
CVS says the $70 billion deal would lead to better health care for consumers by simplifying the system, increasing access, promoting better primary care and lowering costs.
Ohio Medicaid drug audit calls for transparency, highlights pharmacy closures
AUGUST 16, 2018
A state audit of Ohio's Medicaid prescription drug business says there's not nearly enough transparency for state officials to know whether taxpayers are getting their money's worth from the $2.5 billion annual expenditure.
It also raises questions about whether a reimbursement setup dominated by pharmacy giant CVS is driving smaller competitors out of business and reducing Medicaid recipients' access to medicine.
Stark pharmacies struggle amid PBM issues; CVS offered to buy stores
AUGUST 16, 2018
CANTON Ohio Auditor Dave Yost is expected to release a report this morning that should shed light on whether pharmacy benefit managers or PBMs have been overcharging the state's Medicaid program at taxpayer expense.
The report, requested by state legislators, may also provide more information on whether PBMs are inadequately reimbursing pharmacists across the state, including in Stark County, for dispensing drugs to Medicaid patients. And it could reveal the spread — the difference between what it charges Medicaid and what it pays the pharmacists for the drugs — PBMs are pocketing.
Ohio firing pharmacy middlemen that cost taxpayers millions
AUGUST 14, 2018
The Ohio Department of Medicaid is changing the way it pays for prescription drugs, giving the boot to all pharmacy middlemen because they are using "spread pricing," a practice 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 the secretive pricing method and move to a more transparent pass-through pricing model effective Jan. 1.
How so-called rebates drive up the cost of prescription drugs
AUGUST 12, 2018
Rebates demanded by pharmacy middleman from drug manufacturers are driving up Americans' prescription-drug costs by billions of dollars.
A Dispatch analysis of financial records from the country’s largest drug manufacturers found that practices of the pharmacy benefit managers, also known as PBMs, push the list price of their drugs well beyond actual costs.
Judge rules that part of CVS/Medicaid report can be released
AUGUST 7, 2018
A Franklin County judge has blocked release of a full state report detailing the costly practices of pharmacy middlemen in the tax-funded Medicaid program - at least for now - but will allow some parts to be disclosed.
Common Pleas Judge Jenifer French Tuesday granted a temporary restraining order at the request of CVS Caremark, which argued the 51-page analysis contains trade secrets including drug pricing, rebate and cost information.
State accuses pharmacy middlemen of 'driving up costs'
July 31, 2018
For the first time, state officials flatly accused pharmacy middlemen of "driving up costs" in the tax-funded Medicaid program and hiding their activities behind a veil of secrecy.
The new accusation comes in a Franklin County court filing that fight CVS Caremark’s attempt to keep secret a $50,000 report detailing how pharmacy benefit managers charged higher-than-industry-standard costs on prescription drugs for Medicaid patients.
Was CVS favored by state in multimillion-dollar deal to provide HIV drugs?
July 29, 2018
State officials awarded a contract to CVS last year that allowed the national pharmacy company not only to control federal money for HIV drugs in Ohio, but also to require patients to buy their medicine only at CVS pharmacies
DeWine tells Ohio’s pharmacy middlemen he’s ready to sue them
July 23, 2018
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.
Report on pharmacy middleman pricing to stay secret -- for now
July 17, 2018
Plans to release a report documenting the costly practices of pharmacy middlemen were shelved by Ohio Medicaid officials on Tuesday at the request of a judge reviewing claims by CVS Caremark that the analysis contains confidential information and trade secrets.
Franklin County Common Pleas Judge Jenifer French asked for the delay to allow CVS Caremark time to identify information in the 51-page report it considers proprietary and it believes should be redacted before being released to the public, lawmakers and news media.
CVS sues state to block release of report on its drug pricing
July 16, 2018
CVS Caremark is suing the Ohio Department of Medicaid to block it from releasing the full report detailing how the pharmacy middleman charged taxpayers three to six times as much to process prescription drugs for the poor and disabled as the industry standard.
"The disclosure of proprietary information in the Caremark agreements would be devastating to Caremark's entire nationwide business model," CVS attorneys argued in an 18-page request for a temporary restraining order filed Monday in Franklin County Common Pleas Court.
Local pharmacies and their personal care in danger of disappearing
July 15, 2018
Mark Kratzer's pharmacy business seems to be as much a calling as a profession.
“I’ve always told people I’ll probably die at the counter, but I don’t know if I’ll have a counter to die at,” he said at his Wilmington store, Kratzer's Hometown Pharmacy.
He's far from alone. As with other health professions, part of the attraction of pharmacy is the chance to help others, but many independent and small-chain pharmacists say that's increasingly difficult to do.
Amid pharmacy benefit manager inquiry, officials' ties to CVS questioned
Possible conflicts of interest between the Kasich administration and CVS are fueling skepticism over whether Ohioans will see changes in a Medicaid setup that gives the national pharmacy company up to six times its actual cost of providing prescription drugs to Ohio's poor and disabled.
The relationships are shrouded in secrecy — in part because of confidentiality laws and in part because the administration of Gov. John Kasich has been less than forthcoming about critical aspects of CVS’s business with the state.
The concerns are heightened because Medicaid officials withheld key information from state legislators about CVS costs and displayed a reluctance to make substantive changes to a system that many lawmakers and pharmacists say is a ripoff of taxpayers.
Lawmakers tear into Ohio Medicaid officials: Are you incompetent?
June 28, 2018
Enraged by pharmacy middlemen making millions on Ohio’s health insurance program for the poor and disabled, lawmakers tore into Medicaid officials Thursday, accusing them of withholding data, failing to recognize the scope of the problem, and ignoring recommendations for reducing costs.
"Your attitude is callous and insensitive to the poor people we all serve," said Sen. Vernon Sykes, D-Akron, as he scolded Medicaid officials before the Joint Medicaid Oversight Committee.
HIV patient sues Ohio over drug-aid program requiring use of CVS
July 5, 2018
An HIV patient is using an anti-Obamacare provision in the Ohio Constitution to sue the state for forcing him to use CVS pharmacies if he is to receive benefits under a government program that helps with drug costs.
Edward J. Hamilton of Columbus filed suit this week in the Ohio Court of Claims against the state Department of Health in connection with the department’s HIVDrug Assistance Program, which requires participants to get their medicine through the national CVS pharmacy chain.
State health department, CVS sued over HIV mailing
July 1, 2018
The Ohio Department of Health has been sued in connection with a mailing that might have publicly disclosed the identities of 6,000 HIV patients. The suit follows one in another venue against CVS Caremark, the entity that actually sent the letters.
The suit against the state says that in allowing CVS to undertake the mailing, the state was sharing patients’ private medical information without authorization.
Editorial: Ohio must demand drug-pricing transparency
July 1, 2018
The more we learn about the operations of pharmacy benefit managers, the worse their greedy scheming is revealed to be.
PBMs, as they are known, were once hailed as an answer to provide needed cost controls through claims management for insurers and payers including Medicaid. But as their middleman role between prescription-drug manufacturers and payers has grown, they have been revealed as lining their pockets on both ends of the equation.
Drug middlemen charging Ohioans triple the going rate — or more
June 27, 2018
Pharmacy middlemen are charging Ohio taxpayers three to six times as much to process prescription drugs for the poor and disabled as the industry standard.
Figures in a study commissioned by Medicaid officials indicate that pharmacy benefit manager CVS Caremark billed the state about $5.60 per script, while Optum Rx charged $6.50 per script.
CVS Caremark cut payments to pharmacies amid $70 billion deal to buy Aetna
June 24, 2018
It happened in Ohio, Arkansas, Iowa, New Jersey, New York and possibly other states. Pharmacy middleman CVS Caremark suddenly cut the reimbursements it paid community pharmacies for drugs, some of them far below pharmacists’ costs for potentially lifesaving medications.
Each of the cuts happened late last year or early this year — all within a few months of when CVS Health announced it was acquiring health insurer Aetna.
In a Dispatch review of data collected from 40 pharmacies, the numbers back up what lawmakers and critics said happened in the fourth quarter of 2017: CVS Caremark sharply reduced payments to pharmacies.
CVS Caremark hitting pharmacists with fee increase
June 22, 2018
Under increased scrutiny about millions in tax dollars it receives to manage Medicaid drug benefits, CVS Caremark announced this week it will increase the fees it charges pharmacists, including to fill prescriptions for the poor and disabled.
The transaction fee increase effective Friday came the day after a state report showed pharmacy middlemen billed taxpayer-funded Medicaid 8.8 percent more than the amount they reimbursed pharmacists.
The practice known as "spread pricing" allowed the middlemen to take a cut of $223.7 million during the year ending March 31, according to an analysis commissioned by the Ohio Department of Medicaid.
State report: Pharmacy middlemen reap millions from tax-funded Medicaid
June 21, 2018
Pharmacy middlemen managing Ohio Medicaid’s prescription drug program billed taxpayers 8.8 percent more for medications than they paid pharmacies, according to an audit commissioned by the health insurance program for the poor and disabled.
That difference — $223.7 million — was kept by CVS Caremark and Optum RX, pharmacy benefit managers for Medicaid’s five managed care plans.
The analysis of more than 39 million drug transactions for the year ending March 30 appears to be the first comprehensive review of “price spread” on behalf of a government agency, state officials said. They hope other states follow suit.
'Cost-cutting' middlemen reap millions via drug pricing, data show
June 17, 2018
A middleman company hired to keep the state's prescription-drug prices in check for Ohioans on Medicaid is receiving millions in taxpayer money meant to provide medications for the poor and disabled.
Records of transactions provided to The Dispatch from 40 pharmacies across Ohio show that CVS Caremark routinely billed the state for drugs at a far higher amount than it paid pharmacies to fill the prescriptions. The state-sanctioned practice, known as "spread pricing," allows the middlemen, called pharmacy benefit managers, to keep the difference on medications used to treat health concerns ranging from mental illness to osteoporosis.
Wary Ohio officials want deeper look at how CVS sets drug prices
June 19, 2018
Ohio’s auditor and the attorney general said Tuesday that a Dispatch investigation into a middleman that collects millions in taxpayer dollars meant for Medicaid patients has raised significant concerns and they are launching concurrent inspections.
The response is to the latest investigation by The Dispatch that found CVS Caremark billed the state roughly 12 percent more for drugs than what it paid pharmacies for medications dispensed to Ohioans on Medicaid.
'Free' pain cream costs city more than $8,000 a prescription
June 10, 2018
Armed with prescription forms and a deceptive pitch, the pharmacy reps walked into a handful of Columbus police and fire stations.
The sales line went something like this: Here is a new topical cream that will ease your aches and pains. It also will improve your skin and even help eliminate stretch marks.
The cops and firefighters were told to try it, and handed a prescription form they could give to their doctor.
"It’s of no cost to you," was how the pitch ended.
Mail-order pharmacy system delays meds for some patients
June 3, 2018
Imagine the terror of being diagnosed with cancer.
Your doctor writes a prescription that you pray will save your life. You go to the hospital or oncology clinic’s in-house pharmacy. The medicine is right there on the shelf, but you’re told the only way your insurance will cover your medication, which might cost $10,000 or more per month, is if you get it through the mail.
So, you go home empty-handed and wait. If you’re lucky, the medicine will arrive in just a couple of days. But it could be up to a month before delivery of the drugs.
Pharmacist says CVS strong-arms cancer-drug business
June 3, 2018
Josh Cox says that CVS will go pretty far in trying to wrest the lucrative business of filling cancer-drug prescriptions away from oncology clinics.
The company, which operates a retail pharmacy chain and manages prescription-drug payments for millions of Americans, has long sent unsolicited faxes to cancer doctors, using confidential patient information, in an attempt to steer business to its own pharmacies, said Cox, pharmacy director for the Dayton Physicians Network.
CVS backs away from dark-money group it contributed to
June 1, 2018
Pharmacy giant CVS Health distanced itself Friday from a pro-Trump dark-money group that it contributed to. CVS said it only learned after it made its $500,000 contribution that the group’s leaders and members have a history of racist and other kinds of hate speech.
CVS, the country’s seventh-largest corporation, said its goal in making the contribution was to advance last year’s Republican tax cut.
House committee OKs crackdown on pharmacy-benefit managers
May 22, 2018
A House committee on Tuesday recommended passage of bipartisan legislation aimed at lowering drug prices by targeting little-known middlemen in the pharmaceutical price chain.
House Bill 479, by Reps. Scott Lipps, R-Franklin, and Thomas E. West, D-Canton, would put into state law regulations on pharmacy-benefit managers, or PBMs, recently imposed by the Ohio Department of Insurance.
When pharmacy-benefit manager cuts put lives in jeopardy
May 21, 2018
Jo Anna Krohn is used to emergency calls. As director of Port 45 Recovery in Portsmouth, Krohn works with addicts in an area that is seen by some as ground zero for the nation’s opioid epidemic.
But last fall, she received a call that left her panicked.
It was from a local pharmacist warning that he could no longer stock a generic version of Suboxone because the state was reimbursing him so little for it that he was losing money.
Powerful, secretive middlemen affect drug prices
May 20, 2018
The East Side pharmacist is ready to shout out the names of his customers before they walk through the door of his spotless and brightly lit pharmacy. Typically, the medication is on the counter before the customers make their way to the register.
For an independent pharmacist, those close relationships are vital to staying in business.
But what the pharmacist can’t share with customers is the rationale behind the prices they pay for their prescription drugs.
Aetna whistleblower, who says CVS gouged Medicare and Medicaid customers, is put on leave
May 17, 2018
A whistleblower with Aetna who accused CVS Caremark of gouging Medicaid and Medicare customers with high prescription-drug costs has been placed on paid administrative leave by the insurance company.
The move comes after the whistleblower’s lawsuit was unsealed in federal court in early April. It also comes as CVS Caremark, one of the country’s largest pharmacy benefit managers, pursues the acquisition of Aetna for a reported $69 billion.
Trump targets pharmacy benefit managers, but offers few details
May 11, 2018
President Donald Trump put a big target on the backs of pharmacy middlemen that negotiate drug prices with manufacturers and set payments to pharmacies Friday as he unveiled his plan to lower prescription prices for consumers.
Trump wants to reduce the spread between the price the pharmacy benefit managers, known as PBMs, pay for drugs and rate they pay pharmacies, an opaque system critics say allows PBMs to boost their profits. The system of secret rebates and gag orders on retailers encourages manufacturers to increase prices and undermines efforts to control costs.
Medicaid pharmacy management called ‘a public embarrassment’
May 10, 2018
As an Ohio lawmaker called the state’s method of managing Medicaid pharmacy benefits “a public embarrassment,” officials at one health-care plan agreed to rework its contracts to ensure taxpayers are getting the best deal for their dollar.
It’s the first time that a plan — CareSource Ohio — publicly agreed to make changes. The system that the Ohio Department of Medicaid uses to pay most of the $3 billion it spends each year on prescription drugs has come under intense scrutiny this year.
Trump going after pharmacy-benefit managers to cut drug costs
May 9, 2018
President Donald Trump will announce sweeping new restrictions Friday on pharmacy-benefit managers — middlemen who negotiate drug prices with manufacturers and reimbursements to pharmacies — as part of a sweeping plan designed to lower Americans’ prescription drug costs.
Critics point to three companies they say are using their dominance in the $300 billion marketplace to pad their pockets and drive out competition.
Ohio workers’ comp exec on pharmacy setup: ‘We were being hosed’
May 4, 2018
As Medicaid officials investigate whether pharmacy middlemen are ripping off taxpayers by manipulating drug prices in the insurance program covering 3 million poor Ohioans, another state agency recently found it overpaid millions under a similar arrangement.
“We thought we had a solid contract that kept us from being taken advantage of (but) discovered we were being hosed,” said John Hanna, former pharmacy program manager for the Ohio Bureau of Workers’ Compensation
Ohio shies away from drug plan that saved West Virginia $38 million
May 4, 2018
West Virginia saved $38 million the first year it dumped managed care and handled pharmacy benefits for state workers and Medicaid recipients through a state university.
But Ohio refuses to even consider such a model for its multibillion-dollar Medicaid system, claiming such a change actually would cost the state money.
How can that be?
Iowa lawmaker/pharmacist literally calls ‘BS’ on CVS rationale for high drug prices
April 19, 2018
Pharmacy giant CVS has for months ignored questions in Ohio about a controversial pricing practice, but an Iowa legislative committee on Wednesday got the executive in charge to describe it.
He came after a lawmaker threatened a subpoena.
Rich Ponesse, senior director of trade finance for CVS Caremark, appeared before the Iowa House Government Oversight Committee to explain the difference between what his company pays retail pharmacies and what it charges health plans, a practice known as “spread pricing.”
Three CVS actions raise concerns for some pharmacies, consumers
April 15, 2018
First, CVS set up a website for consumers to compare drug prices.
But the site gave clear preference to CVS pharmacies, automatically putting them at the top of the comparison list. That occurred despite a “firewall” that’s legally required between the drugstore chain and CVS Caremark, the drug giant’s pharmacy benefit manager that runs the site.
Second, CVS’s benefit manager cut Medicaid reimbursements to local Ohio pharmacies this past fall, which some say put them in financial jeopardy.
CVS says it will allow state to see closely guarded drug-price list
April 7, 2018
Ohio apparently is going to get a rare look inside the “black box.”
That’s the moniker used for the closely guarded drug-price lists used by pharmacy benefit managers, which are coming under fire in the Buckeye State and elsewhere for possibly increasing taxpayers’ cost to cover Medicaid prescriptions while lowballing reimbursements to independent pharmacies.
Lawsuit: CVS pricing actions same as accused of in Ohio
April 6, 2018
Pharmacy giant CVS has billed the government far more for seniors’ drugs than it paid to retail pharmacies, an executive with insurer Aetna alleges in an ongoing federal whistleblower suit that was unsealed this week.
The executive, Aetna’s chief Medicare actuary, said CVS admitted to a practice known as “spread pricing.”
State probing whether pharmacy benefit managers are overcharging taxpayers
April 6, 2018
Ohio Medicaid officials pledged Wednesday to investigate claims that pharmacy benefit managers are paying pharmacists far less to fill prescriptions than they charge the state, allowing them to pocket the difference.
Critics say the practice, known as spread pricing, is increasing costs in the tax-funded Medicaid program and driving many pharmacies out of business because some drug reimbursements are less than the cost to pharmacies of acquiring the medication.
Millions of Ohio taxpayer dollars at stake in debate over drug prices
March 25, 2018
Pharmacy benefit managers are receiving $1.54 per pill from Ohio’s Medicaid program for a drug commonly used to treat depression.
The state pharmacy association and operators of nearly two dozen pharmacies across the state say those same pharmacy benefit managers, or PBMs, are paying them only about 18 cents for each of those pills.
Ohio Medicaid official got job with CVS while still working for state
March 22, 2018
A pharmacologist with the Ohio Department of Medicaid last year negotiated a new job with pharmacy giant CVS while she was still employed by the state. She also worked a side job for CVS for almost the entire time she worked for the state.
Ohio ethics rules require state employees involved in job talks with a business affected by their work to inform their supervisors and step back from any work that might affect the business. But on Wednesday, the employee, Margaret Scott, told The Dispatch she never made such a disclosure.
Bill targeting pharmacy benefit managers gets first hearing in Ohio House
March 20, 2018
A House committee opened hearings Tuesday on a bipartisan bill designed to lower the cost of prescription drugs.
House Bill 479 — sponsored by Reps. Scott Lipps, R-Franklin, and Thomas E. West, D-Canton — takes aim at pharmacy benefit managers, known as PBMs, and other third-party administrators that operate as a middleman between insurance and drug companies.
State lawmaker on prescription drug middlemen: ‘We’re getting hosed’
March 15, 2018
State lawmakers criticized Ohio Medicaid officials Thursday, saying they’re slow to act on complaints that private pharmacy benefit managers appear to be profiting excessively by slashing reimbursement rates paid to retail pharmacies.
“We’re getting hosed,” Rep. Mark J. Romanchuk, R-Ontario, said after he and other members of the Joint Medicaid Oversight Committee were briefed by Medicaid officials.
One month she’s supervising state drug program, next month she’s with CVS
March 16, 2018
Margaret Scott had responsibility over the Ohio Department of Medicaid’s pharmacy program until she departed last fall. Within a month, she was working for a company that is receiving billions of pharmacy dollars from Ohio’s Medicaid managed care programs.
Scott and the contractor, pharmacy giant CVS, aren’t answering questions about what happened. But the state’s ethics watchdog — while not speaking specifically about Scott’s situation — said it’s illegal for a state employee to continue to be involved in decisions that might affect an outside business while negotiating a new job with that business.
Ohio legislature will look into CVS Caremark billing practices
March 13, 2018
State officials on Wednesday are expected to announce “efforts to update” the industry that handles prescription-drug benefits for millions of Ohioans.
The news comes a day after The Dispatch reported concerns by some pharmacists that a significant player in the industry, CVS Caremark, is charging Medicaid high prices and paying pharmacies low prices for the same drugs, which they say drives out retail competition. The company denies the accusations.
CVS accused of using Medicaid rolls in Ohio to push out competition
March 123, 2018
Pharmacy giant CVS stands accused of overcharging Ohio taxpayers millions in an attempt to drive out retail competition — a charge that CVS flatly denies.
Bottom line: The company allegedly boosts its profits by overcharging insurers for medications while often reimbursing pharmacists less than the cost of the drug, critics say.
Ohio lawmakers going after pharmacy benefit managers
Jan. 25, 2018
When Ohioans go to pharmacists for their prescriptions, they generally assume they’ll be told the truth about the costs of their medicines. Some lawmakers, however, say that little-known organizations are keeping pharmacists from being honest with their clients.
Reps. Scott Lipps, R-Franklin, and Thomas West, D-Canton, say pharmacy benefit management companies (PBMs) are issuing “gag orders” to keep pharmacists quiet about what could be cheaper medicines for their clients, and keeping the extra money for themselves — something the lawmakers hope to ban with new legislation, House Bill 479.