Friday, November 22, 2019

A Prominent Attorney and Advocate for PBM Transparency Says State Medicaid Plan Hemorrhaging Money

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A national drug-pricing consultant says that despite implementing a new pricing system and other efforts to rein in pharmacy middlemen, Ohio’s Medicaid program continues “hemorrhaging” tax dollars.

“You are hemorrhaging money right now,” Linda Cahn, a critic of pharmacy benefit managers, or PBMs, told the Joint Medicaid Oversight Commission on Thursday.

PBMs hired to oversee the $3 billion-a-year drug program have contracts that allow them to increase profits rather than keeping costs down, she said. The profits are largely hidden and come from rebates from drug manufacturers, manipulating drug costs, self-dealing with affiliated pharmacies and other loopholes, she said.

Tyrone's Commentary:

The three most important aspects of winning radical transparency from a non-fiduciary PBM, in this order, are:

1) Internal PBM Expertise
2) Contract Nomenclature
3) Benefit Design

#2 and #3 above suffer when purchasers of PBM services lack the requisite knowledge and resources to achieve radical transparency in their PBM relationship. Most plan sponsors don't know what they don't know. If a state with unlimited resources requires help in all likelihood so do you.

“There are so many problems here, you have to write a contract that addresses all of them, and you have to bring in people who know enough about this to help the Medicaid division do that ...it’s a very complex industry,” Cahn said.

“If you address all of the problems, you will dramatically, dramatically reduce your cost and end up with far better coverage.”

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