June 13, 2018

Auditor General Initiates Review Of State Medicaid Pharmacy Benefit Managers, Prescription Drug Pricing

Auditor General Eugene DePasquale Wednesday said he is launching a review to bring transparency and accountability to prescription drug pricing in Pennsylvania.
The result will be a special report focused on practices by pharmacy benefit managers (PBMs), which negotiate with drug companies and insurers to help define which drugs are covered by health insurance plans and set the drug reimbursement rates for community and chain pharmacies.
The Auditor General said the state Medicaid Program pharmacy benefit managers were paid over $3 billion of state taxpayer money for prescription services.
“States across the country are struggling with this issue because there currently is no state or federal oversight of these pharmacy benefit managers,” DePasquale said during a news conference at the Capitol. “Taxpayers and businesses deserve more transparency in the pricing of prescription reimbursements than is currently required, and I want to fix that.”
There are four major pharmacy benefit managers in Pennsylvania: CVS/Caremark, Perform Rx, Optum Rx and ESI. They receive state and federal funding through subcontracts originated in the Department of Human Services (DHS) and paid for through Medicaid. DHS contracts with health insurance companies, called managed care organizations (MCOs); the MCOs contract with PBMs.
“My office is in the best position to review the impact PBMs have on hundreds of thousands of Pennsylvanians,” DePasquale said.
DePasquale said his team will look into these questions:
-- How much does the state spend on pharmacy benefit managers;
-- How do pharmacy benefit managers bill insurance companies for a drug;
-- How do PBMs determine the drug reimbursement rate for pharmacies and are those rates consistent across different types of pharmacies;
-- Do PBMs pass along savings from rebates and price cuts they get from drug manufacturers;
-- Why is drug pricing information kept private when taxpayers are footing the bill;
-- What the Department of Human Services is doing about contracts that involve pharmacy benefit managers;
-- Are any Pennsylvania pharmacies are subject to gag orders; and
-- How can Pennsylvania can ensure transparency and fairness in pharmacy pricing for consumers.
“I want to make sure that consumers always know how to receive the best price possible for the prescriptions they need,” DePasquale said.
DePasquale plans to hold regional hearings and invite local pharmacists, pharmacy benefit managers, health insurance companies and health care providers to discuss how best to resolve this complicated issue so that Pennsylvanians are getting the best deals possible on prescription drugs.
Community pharmacists today thanked Auditor General Eugene DePasquale for announcing he is formally undertaking a statewide review of Pharmacy Benefit Manager prescription reimbursement policies under the state’s Medicaid health insurance program.
This statement was released by Patricia Epple, CEO of the Pennsylvania Pharmacists Association--
“Community pharmacists thank Auditor General Eugene DePasquale for his action today to open a review of prescription drug reimbursement practices under the state’s Medicaid Program and will participate in his regional hearings.
“He joins state officials in Ohio, Arkansas and other states in looking into the prescription reimbursement practices of Pharmacy Benefit Managers--  like CVS and CVS Caremark-- that may be driving up the costs of state Medicaid Program while serving to eliminate competition.
“We believe his review will turn up the same pattern of under-reimbursement of community pharmacists and over-reimbursement of pharmacies owned by Pharmacy Benefit Managers as other states have.
“Companies who own Pharmacy Benefit Managers--  like CVS and CVS Caremark-- have been reimbursing community pharmacists for prescription drugs at prices often far below the actual cost of a drug to the pharmacist, and in some cases, paying their own pharmacies several times more.
“The goal here is to reduce Medicaid costs for all taxpayers while providing fair reimbursements for community pharmacists.”
To learn more about these issues, visit the Pennsylvania Pharmacists Association website.
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