Ohio adds new ‘checks and balances’ to $3.5B prescription program

A new contractor has been hired as part of a state effort to introduce “an unparalleled level of financial checks and balances” to the $3.5 billion prescription benefit program with Ohio Medicaid.

This follows years of controversy over how private companies manage billions in drug spending on behalf of the state.

Pharmacy benefit managers are hired by insurers to control costs, negotiate prices and manage and pay out prescription claims. Some pharmacists and lawmakers had accused the companies of keeping too much of the money they manage for Ohio Medicaid and paying out too little to pharmacies, as well as not being transparent on their business dealings.

The two year contract, with the option to extend up to six more years, is valued at $1.5 million per year, or about $12 million for the entire 8-year period.

On Wednesday, the Ohio Department of Medicaid announced Myers and Stauffer as its Pharmacy Pricing and Audit Consultant.

The consultant will work with Ohio Medicaid to establish pharmacy prices and conduct fiscal oversight of the single pharmacy benefit manager, Gainwell Technologies, that is replacing the different contractors used by the different insurance companies.

In 2019, the Ohio General Assembly instructed Ohio Medicaid to adopt this change after a consultant’s report on how these contractors were paid $224 million in overhead by Medicaid.

The new single pharmacy benefit manager system could save around $150 to $200 million a year, though final net cost change still needs calculated. Those savings are anticipated for the first full year of operations.

Myers and Stauffer’s oversight is designed to eliminate potential conflicts of interest, prevent prescription drug steerage, and guard against other potential financial mechanisms that could reduce public confidence, increase cost, and obscure visibility into the operations of the program.

“Ohio Medicaid will work hand-in-hand with Myers and Stauffer to create rigorous checks and balances needed to make sure we are using dollars wisely,” stated Maureen Corcoran, Ohio Medicaid director.

This pharmacy change is part of the DeWine administration’s larger project overhauling the Ohio Medicaid program, provides benefits for more than 3 million Ohioans. The newly designed program is expected to launch in early 2022.

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