A Waynesville-based pharmacy benefit manager picked up its biggest contract yet: managing benefits for Kettering Health Network, which has 13,000 employees.
The local firm is growing at a time when some of its largest competitors in the industry — such as CVS Health and OptumRx — are being scrutinized by some officials in the DeWine administration over their business practices.
The large pharmacy benefit managers say they negotiate discounts on drugs and help the state government save money at the pharmacy counter, but the Ohio Attorney General is investigating their practices and some Ohio pharmacists have claimed the companies keep too much of the money they manage and don’t pay pharmacists enough.
Kyle Fields, CEO of Appro-Rx, said as his competitors are scrutinized, his firm has been getting attention and picking up new customers. In October, Appro-Rx completed a $100,000 expansion to its downtown Waynesville headquarters, where it added offices, meeting spaces, a media center and upgraded communications systems.
“We’re very appreciative of their scrutiny because we run a very different business model than the PBMs that are under scrutiny. They are traditional and we’re transparent,” Fields said.
The contract with Kettering Health Network started Jan. 1 and is Appro-Rx’s largest customer since it began in 2000 as a family business.
Kettering Health is a network of eight hospitals, with a ninth under construction, and other outpatient sites and physician practices. Appro-Rx took part in an extensive six-month Request For Proposal process before ultimately winning the health network’s business against a handful of competitors.
“We are thrilled to partner with such an innovative, forward-thinking company who demonstrates a true commitment to its employees’ well-being,” said Kyle Fields, CEO of Appro-Rx.
Until a few years ago, pharmacy benefit managers were middlemen in the health care supply chain that few had heard of. The companies subcontract with insurance companies — including the insurance companies that manage Ohio Medicaid plans — and negotiate drug prices with pharmacies. They typically pay a pharmacist for a prescription drug and then bill the insurance company a higher price for the drug, with the middlemen keeping that mark-up to cover their administration costs.
But the middlemen are now in the national spotlight as elected leaders in different states question what are sometimes undisclosed and dramatic differences between the price paid to pharmacies for drugs and the price billed to insurance plans, including taxpayer funded insurance plans such as Medicaid.
Fields bills his company as a transparent alternative that avoids these problems. The only way the company gets paid is through a disclosed administrative fee. If they get drug rebates, they pass those savings on to the client, he said.
“We’re not undercutting the competition. We’re simply not over charging our clients,” Fields said.