When the big ball slowly dropped in Times Square to mark the dawn of 2019, something much less visible happened about 500 miles away: The price tag of specialty drugs for Ohio’s neediest residents suddenly jumped.

A prescription for 90 tablets of Capecitabine, a chemotherapy drug, cost about $1,175 on Dec. 31, 2018. That eye-opening price looked downright cheap next to the one on Jan. 1, 2019: more than $2,000, a 70% increase.

Sildenafil, which relieves high blood pressure in the lungs, cost about $31 for a 90 pills at the end of last year. When this year dawned, the price was eight times as much, nearly $250.

That’s nothing compared to the overnight leap for 30 pills of Entecavir: from less than $45 to more than $900 — 20 times as much for the same package of 30 pills used to treat chronic Hepatitis B.

Many other generic specialty drugs showed significant increases as well. Specialty drugs are typically used to treat such complex conditions as hepatitis, cystic fibrosis, HIV and some cancers. Sometimes they require special handling, such as refrigeration.

So why the big price changes on New Year’s Day?

Critics provide a simple explanation: New restrictions by the state Medicaid department starting Jan. 1 spurred pharmacy benefit managers to find a new way to make money. And specialty drugs were the ticket.

Pharmacy benefit managers, known as PBMs, serve as middlemen between the state Medicaid department, which pays for the drugs, and pharmacies, where the drugs are purchased for the 3 million poor or disabled Ohioans on Medicaid. The PBMs also essentially set the price paid by taxpayers, via managed-care organizations hired by the state to administer the Medicaid program.

But when it comes to specialty drugs, there’s a catch: PBMs often guide purchases to pharmacies run by the PBMs’ parent company. Thus, when the price Medicaid must pay for specialty drugs increases, so does revenue flowing to the PBM companies’ coffers.

Antonio Ciaccia of the Ohio Pharmacists Association said it’s clear the PBMs’ business model changed due to the new Ohio Medicaid restrictions at the beginning of the year.

Previously, the PBMs used a much-criticized method called spread pricing, which refers to the difference between what these multibillion-dollar corporations were receiving from the state and the lesser amount they were paying pharmacies. That netted the PBMs nearly a quarter billion dollars in a year, a state study showed.

But the state outlawed that practice on Jan. 1 in favor of a “pass-through” pricing model in which the PBMs are supposed to be charging the state the same price they are setting for the pharmacies that prescribe the drugs.

The PBMs needed a new way to make profits, so they increased prices for specialty drugs, Ciaccia said.

The information about the specialty drug price increases comes from new drug utilization data for the first quarter of 2019 posted by the Centers for Medicare & Medicaid Services.

Those figures confirm Dispatch findings in June from data provided by some three dozen pharmacies across Ohio.

State Medicaid Director Maureen Corcoran said the challenge of specialty drug price increases, and the potential for conflicts of interest with PBMs, is a problem in many states, not just Ohio.

About half of Ohio Medicaid’s specialty drug prescriptions currently are filled by pharmacies with ties to the PBMs or managed care organizations, she said.

Starting in 2020, Medicaid will require that specialty drug prescriptions cannot be limited to pharmacies tied to PBMs, but must be made available to any pharmacy that can fill the prescription at the same or lower cost.

“We’ll be expecting them to basically not have a single or a sole relationship with a specialty pharmacy, that we’re expecting that to be a more open network,” Corcoran said.

Also in January, PBMs no longer will be the ones to decide which drug is a “specialty” drug subject to higher prices and potential conflicts of interest. Instead, the state itself will develop a single preferred drug list.

“You do want to take out chance for abuse,” she said.

Corcoran is scheduled to appear before the Joint Medicaid Operating Committee next week to give state lawmakers an update on their longstanding concerns about PBMs.

A spokesman for CVS Caremark, which serves as the PBM for the large majority of Medicaid drug purchases, declined to comment.

But a spokesman for a national group representing PBMs did.

“The selected medications are not an accurate portrayal of specialty generic drug prices in Ohio’s Medicaid program,” said Greg Lopes, assistant vice president for strategic communications for the Pharmaceutical Care Management Association. “The specialty medications listed experienced fluctuations in reimbursement throughout the year, but overall had a decrease in reimbursement over the 2018 to 2019 one-year period.

“Thus, a two-quarter analysis is inaccurate, and a more accurate analysis of drug spending must be conducted over a longer time period than just two quarters.

“In addition, in Ohio, for the selected drugs there are multiple generic versions and multiple payers, and so it is not possible to determine which payer reimburses for a specific drug version.”

Despite the PBMs' statements, federal data on the cost of prescriptions show the actual price of many specialty drugs is going down, not up, Ciaccia noted. His partner in a nonprofit called 46brooklyn Research, former community drug-chain president Eric Pachman, provided several examples of how price mark-ups that often already were substantial increased in early in 2019 from late 2018:

• The cost of a single prescription for 0.5 mg capsules of Tacrolimus, used to prevent transplant rejections, went from $15.32 to $60.36, a price mark-up rocketing from 75 cents a prescription to nearly $45.

• The markup for 100 mg of leukemia chemotherapy drug Imantinib Mesylate jumped $274 a prescription, increasing from 491 percent to 572 percent of the federal average price.

• A script for 1 mg of Entecavir showed an increased mark-up of $552, growing from 284 percent to 1,394 percent.

• A $425 rise in the mark-up occurred for a prescription of 500 mg Capecitabine, swelling from 431 percent to 683 percent.

Ciaccia's conclusion: "You have the price of a drug going down, and the amount charged to the state increase."

drowland@dispatch.com

@darreldrowland