Sykes Concerned About New PBM Model for Drug Pricing
August 16, 2018
Vernon Sykes News
Today, state Senator Vernon Sykes (D-Akron) commented on the publication of state Auditor Dave Yost’s report on prescription drug pricing by pharmacy benefit managers.
“I’m concerned PBMs may continue to overcharge taxpayers even with the proposed changes to the business model,” said Senator Sykes. “According to the Auditor’s report, under the new system, we have no way of knowing how PBMs would calculate drug costs and their fees. The General Assembly should look at ways to make sure that PBMs keep costs low so that they are in fact providing a benefit to taxpayers.”
According to Yost’s report, PBMs pocketed $224.8 million in 2017 from charging managed care plans a higher price for prescriptions than they reimbursed pharmacies, a practice known as spread pricing. A report by HealthPlan Data Solutions found that CVS Caremark and Optum Rx, the two PBMs that contract with Medicaid’s five managed care companies, charged the state up to 620% and 720% per prescription respectively.
“In Ohio, we have seen private companies win lucrative public contracts with little oversight,” said Senator Sykes. "Companies are pulling in record profits, while many Ohioans have to choose between food or medicine. This is not right and I challenge my colleagues to rethink our overall approach to privatization, which often leads to the abuse of taxpayer dollars and erosion of the public trust.”
The General Assembly has been recently criticized for creating a regulatory structure that has allowed unaccountable private companies to profit hundreds of millions of taxpayer dollars. The discovery of PBMs fleecing taxpayers follows the closing of online charter school ECOT, which was found to owe the state about $80 million for faulty enrollment reporting.
“I’m concerned PBMs may continue to overcharge taxpayers even with the proposed changes to the business model,” said Senator Sykes. “According to the Auditor’s report, under the new system, we have no way of knowing how PBMs would calculate drug costs and their fees. The General Assembly should look at ways to make sure that PBMs keep costs low so that they are in fact providing a benefit to taxpayers.”
According to Yost’s report, PBMs pocketed $224.8 million in 2017 from charging managed care plans a higher price for prescriptions than they reimbursed pharmacies, a practice known as spread pricing. A report by HealthPlan Data Solutions found that CVS Caremark and Optum Rx, the two PBMs that contract with Medicaid’s five managed care companies, charged the state up to 620% and 720% per prescription respectively.
“In Ohio, we have seen private companies win lucrative public contracts with little oversight,” said Senator Sykes. "Companies are pulling in record profits, while many Ohioans have to choose between food or medicine. This is not right and I challenge my colleagues to rethink our overall approach to privatization, which often leads to the abuse of taxpayer dollars and erosion of the public trust.”
The General Assembly has been recently criticized for creating a regulatory structure that has allowed unaccountable private companies to profit hundreds of millions of taxpayer dollars. The discovery of PBMs fleecing taxpayers follows the closing of online charter school ECOT, which was found to owe the state about $80 million for faulty enrollment reporting.