Researchers from the University of North Carolina Lineberger Comprehensive Cancer Center, Northwestern University Feinberg School of Medicine and Boston University Questrom School of Business examined the impact of Ohio Medicaid's switch in 2011 from a fee-for-service model to a managed care model to administer its outpatient prescription drug benefits.
They report that an independent audit in 2018 found the change to a managed care program, which uses pharmacy benefit managers, saved the Ohio Medicaid $145 million annually. Pharmacy benefit managers are intermediaries in the drug supply chain that function as third-party administrators of pharmacy benefits. The savings were largely derived by the lower prescription claims prices the pharmacy benefit managers billed.
Savings - Cost - Trevor - Royce - MD
These savings, however, came at a cost, said Trevor Royce, MD, MS, MPH, the paper's corresponding author and an assistant professor of Radiation Oncology at UNC School of Medicine and UNC Lineberger. His coauthors were Sheetal Kircher, MD, MS, of Northwestern and Rena M. Conti, PhD, of Boston University.
"Ohio policymakers should be applauded for their empirical approach in tackling the cost of prescription drugs," said Royce. "The Ohio audit found pharmacy benefit managers engage in opaque pricing practices that likely contribute to the rising costs of care and prescription drugs."
Authors - Issues - Concern - Ohio - Pharmacy
The authors identified several issues of concern. Ohio pharmacists believed pharmacy benefit managers used anti-competitive practices and manipulated drug pricing. This included offering different drug pricing to affiliated pharmacies than independent pharmacies. Some pharmacy benefit managers implemented "gag clauses" that prevented pharmacies from counseling patients on the most cost-effective medication options. A more controversial practice, said Royce, was the use of "spread pricing," in which pharmacy benefit managers charged Ohio Medicaid a high price for a drug but paid pharmacies a lower price.
The pricing difference could produce significant revenue...
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