State officials on Wednesday will announce "efforts to update" the industry that handles prescription-drug benefits for millions of Ohioans.
The news comes a day after The Dispatch reported suspicions that a huge player in the industry, CVS Caremark, is over-billing Medicaid and underpaying pharmacies in an effort to drive out retail competition. The company denied the accusations.
Some lawmakers have been looking into whether "pharmacy-benefit managers" such as CVS Caremark are using a lack of transparency to take advantage of health plans and customers, including Medicaid, the federal-state health program for the poor that serves more than 3 million Ohioans.
CVS officials last week wouldn't say whether it is reimbursing retail pharmacies at one rate and then billing health plans for much more. Those rates, which come from "maximum-allowable-cost" lists, aren't available to the public or to the health plans that contract with Ohio Medicaid.
Some managed-care advocates point out that pharmacy-benefit managers use their size and sophistication to negotiate lower prices from pharmacists and drug manufacturers that save customers money when compared with the traditional fee-for-service model. But Rep. Kirk Schuring, R-Canton, the No. 2 House leader, questioned whether the plans need to conduct so much of their business in secret.
"It’s all about transparency, about being able to ascertain what is being paid to the (pharmacy-benefit managers), what the ultimate savings are for the patients who receive medication through the PBMs," he said Tuesday. "There seems to be a concern by some that they can’t connect the dots because of a lack of transparency."
Republicans will hold a 9 a.m. press conference in which they will discuss strategies. Republican State Auditor Dave Yost, House Speaker Cliff Rosenberger, R-Clarksville, Rep. Ryan Smith, R-Bidlwell, Rep. Scott Lipps, R-Franklin, and other members of the House Republican Caucus will be there.
Christine Cramer, a spokeswoman for CVS, said her company is open to the process.
"We are a committed, major employer and business operator in Ohio and look forward to having an open discussion with legislative leaders on this and any other topics or concerns," she said in an email. "We regularly make ourselves available to the leadership in the legislature as a resource and they know we are willing and ready to work with them."
Lipps already has filed a bill to end certain clauses some large pharmacy-benefit managers require in their contracts with pharmacies. They prohibit pharmacists from telling customers that the cash price for a drug is cheaper than the insurance copay.
Cramer on Tuesday said that CVS does not engage in the practice.
Ohio isn't the only state to raise concerns about the behind-the-scenes influence and profitability of pharmacy-benefit managers.
Kentucky lawmakers say their Medicaid program last $1.68 billion year spent on prescription drugs, and pharmacy-benefit managers — including CVS — pocketed $680 million of that amount, The Associated Press reported. One Kentucky state senator, Tom Buford, said he believed CVS also was using its power as a pharmacy-benefit manager to drive out competition for its retail business.
Concerns also have been raised in Louisiana over the lack of transparency in contracts between pharmacy-benefit managers and state Medicaid programs.
And Bloomberg News earlier this month reported that at the start of the year CVS Caremark slashed its reimbursements to outside pharmacies while paying more to its own.
Seven of the 26 states that have Medicaid managed care administer pharmacy benefits themselves. West Virginia recently used an administrative measure to do so as well, and Kentucky is considering legislation that would have a similar effect.
Marty Schladen is a reporter with the Columbus Dispatch. Dispatch reporter Jim Siegel contributed to this story.