Ohio action on Medicaid pharmacy prices cited as model for national reform

When federal regulators announced new guidelines this week to crack down on excessive profits by private Medicaid managed-care companies and their pharmacy benefit managers — also known as PBMs — they credited Ohio for its effort to combat the problem (Source: “Ohio's battle with drug costs provides road map for other states,” Columbus Dispatch, May 21, 2019).

"We released new guidance (Wednesday) to curb the games that health plans and PBMs play with pharmacy spread pricing that drive up costs for taxpayers. I want to recognize the states that have been proactive on this issue already, including Texas and Ohio," said Seema Verma, administrator of the Centers for Medicare and Medicaid Services.

Ohio last year gained national attention over the practice of spread pricing, in which pharmacy benefit managers bill the state Medicaid program far more than they pay pharmacists for medications and keep the difference. The billing arrangement was in place for years and increased costs for taxpayers, who finance the health insurance program for nearly 3 million Ohioans.

In response, Medicaid officials abolished spread pricing and this year implemented a “transparent, pass-through” payment system that pays PBMs a set administrative fee and requires them to bill the state the same amount they pay pharmacies.