Attorney General Dave Yost on Monday called for legislative reforms intended to bring more transparency and better oversight of the drug middlemen who each year spend billions of taxpayer dollars on prescriptions for the poorest Ohioans.

The middlemen, known as pharmacy benefit managers, negotiate rebates from drug manufacturers and decide how much to pay pharmacies on behalf of managed care plans that work with the state. As a third party that contracts with a private company, the PBMs’ contracts aren’t hidden only from the public, they’re often also kept secret from the state officials responsible for programs such as Medicaid, the federal-state health-care program for the poor and disabled.

Investigations showed that the PBMs serving Ohio Medicaid — CVS Caremark and OptumRx — in 2017 charged $224 million more for drugs than they reimbursed pharmacies.

In a statement Monday, Yost said PBMs are working deals behind the scenes to benefit themselves.

“PBMs have taken advantage of the lack of transparency and lack of centralization to the detriment of Ohio taxpayers,” Yost said. “This must stop. Centralization will allow for the comprehensive review of prices across the entire drug purchase portfolio to eliminate this problem.”

Ohio’s largest Medicaid managed-care company, CareSource, this month announced that it was ditching CVS as its PBM on Jan.1 and entering into a contract with Express Scripts that state officials and a third-party auditor will be able to see and monitor — although it will remain outside of public view.

Yost’s proposal goes a step further. Not only would state officials be able see PBM contracts, they would write a master contract that all PBMs working with state programs would have to use.

“Ohio needs to aggregate its purchasing power to become a better negotiator and a smarter consumer,” he said.

In addition, Yost is proposing to:

• Give the Ohio auditor unrestricted authority to review all PBM drug contracts, purchases and payments.

• Give PBMs a legal responsibility to protect the financial interests of the state.

• Prohibit non-disclosure agreements on drug pricing.

In addition to the Medicaid department, Yost’s office is investigating PBM contracts on behalf of the Department of Administrative Services; the Ohio Public Employees Retirement System; the State Highway Patrol; the School Employees Retirement System of Ohio; the State Teachers Retirement System of Ohio; and the Ohio Police and Fire Pension Fund. His office already has filed suit against OptumRx over its performance as PBM to the Bureau of Workers’ Compensation.

“When state agencies entered into these nebulous deals with PBMs, they unknowingly hired a fox to guard the henhouse,” Yost said. “But he was a smart fox. He didn’t kill the chickens; he helped himself to the eggs.”

mschladen@dispatch.com

@martyschladen