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Ohio Medicaid accused of strong-arm tactics on pharmacies, just like PBMs

Pharmacy deserts for the poorest and disabled Ohioans could grow unless a dispute over new state Medicaid contracts gets settled soon, industry advocates say.

"The public is going to start losing independent pharmacies, they’re going to be losing chain pharmacies if this does not get resolved," said Ernie Boyd, executive director of the Ohio Pharmacists Association.

In some rural Ohio counties, a pharmacist is the only health professional regularly available. “If they lose them, I can guarantee you that the health of that county will continue to spiral downward,” Boyd said.

"To stamp any possible profit out of our business is essentially killing jobs, and putting Ohioans lives at risk from not having access to pharmacist who catch errors, drug interactions, and overdoses daily," he said. "The government is pushing us to do more to stop narcotics, but if we’re not even around in these smaller towns and urban areas, we have no shot at helping anything."

Already, the state is being affected by the unrelated closure of numerous CVS and Walgreens pharmacies.

Ohio's 'pharmacy deserts' may grow due to Medicaid reimbursement dispute

While some define pharmacy deserts as locales where residents have no pharmacy within a mile or two, others say it's any area with poor access to prescription medications.

The irony of this dispute between pharmacists and the state Department of Medicaid: Its roots stem from the DeWine administration's attempt to address years of complaints by pharmacists about Medicaid's pharmacy benefit managers, accused of profiteering in their role as middlemen in the prescription drug supply chain.

In a move to get rid of those PBMs, Ohio Medicaid developed a new approach to paying for prescription drugs that was supposed to replace the PBMs' "take-it-or-leave-it" pharmacy contracts from PBMs.

But key lawmakers and pharmacists themselves are now wondering whether the much-touted reforms made a difference.

What's at the heart of this dispute?

The clash centers on Medicaid contracts Ohio pharmacies are supposed to sign by Wednesday to provide prescription drugs for the $3 billion program when the revamp takes effect in October. The main sticking point: Ohio Medicaid isn't telling the pharmacies how much they'll get paid under those contracts.

While that's a no-starter for some pharmacists, others fear that if they don't sign the agreement by the deadline, they will be cut out of Medicaid business that helps keep their doors open.

"The question is what is worse: Being excluded from providing care to Medicaid managed care members or being able to serve Medicaid managed care members and having no idea if that service will at the very least be at a break-even reimbursement," said Nancy Wharmby, president of Medicine Center Pharmacy, which has locations in Canton, Minerva, Louisville and New Philadelphia in eastern and northeastern Ohio.

More than 20% of Ohioans are on the federal-state Medicaid program, which accounts for about 4% of Ohio’s economy. The annual outlay of well over $30 billion is easily the largest in state government when federal dollars are included.

Lynne Fruth, president and chairman of Fruth Pharmacy, said: "I am hearing from many independent pharmacies that they will not sign" the new contracts without knowing how much they will get paid by the state.

"These terms are completely unacceptable, and (the Medicaid agency) and/or the Ohio legislature must intervene to ensure that pharmacies will continue to be willing to participate in Medicaid," she said in a letter Tuesday to Medicaid Director Maureen Corcoran.

"We must never lose sight of the goal of Medicaid: to serve the most vulnerable population in Ohio."

'This threatens the very survival of high-Medicaid pharmacies' in Ohio

Fruth's company operates 10 pharmacies across Appalachian Ohio. All are in high-Medicaid areas, most in communities with relatively few other pharmacy options.

She takes issue with a contract provision that gives the state 90 days to pay pharmacies for the prescriptions they fill for Medicaid recipients.

"This is an unreasonable provision and threatens the very survival of high-Medicaid pharmacies," Fruth said.

Boyd said the state's plan to update the amounts for drug reimbursements only every six months is much too slow in a world in which often drug prices change weekly, and sometimes daily.

"If my price for insulin doubles on Jan. 15, I’m supposed to live with that until July?”

All the critics cried foul on a comment from Corcoran during a May 19 Joint Medicaid Oversight Committee meeting that Medicaid pharmacists "tell me that it is not uncommon to have pharmacies sign contracts without knowing all the information.”

"Generally, pharmacies know if they will make a profit or not before they sign a business contract," Boyd said. "We need to know the price to be able to sign a contract."

Lawmakers: Ohio's new drug setup uses same 'bullying' tactics as PBMs

Rep. Scott Lipps and others at the Medicaid oversight committee meeting compared the agency's approach to that of much-criticized PBMs that the state is dumping.

“We’re still using a tactic that the PBMs have used, which we called strong-arming – I would say bullying – of saying you will sign this contract even though the pricing or the terms aren’t there," said the Cincinnati-area Republican.

"That’s unfair. I think we were trying to be transparent and fix some of that … We shouldn’t expect someone to sign something with terms not disclosed.”

Sen. Nickie Antonio said she hears that pharmacists could be penalized under their new agreements.

"They’re expected to sign a contract not knowing what these fees are going to be and if they don’t there’s going to be a penalty. That sounds like strong-arming to me," the Lakewood Democrat said.

Corcoran spokeswoman Lisa Lawless said Tuesday that the “penalty” discussed by the oversight committee "did not relate to the contract to be a pharmacy provider" for those receiving Medicaid.

Instead, the Medicaid agency threatened to terminate pharmacies' contracts to provide drugs for the program if they did not complete a pricing survey that will be used to calculate average prescription drug costs for Ohio.

Lawless noted, "However, at this time, we are not excluding providers from participation if they didn’t respond to the initial survey."

The average drug cost will help determine how much pharmacies are reimbursed for Medicaid drug purchases under the new state contracts. The state also will set a "dispensing fee" designed to cover pharmacies' cost for filling a Medicaid prescription.

In response to a question from the committee's chairman, Sen. Mark Romanchuk, R-Ontario, Corcoran said, "We have had an excellent relationship with the pharmacies as the whole … There isn’t a culture in our department of hostility or reluctance or resistance to the pharmacies."

The new contracts were prepared by an Arkansas-based state Medicaid consultant, Gainwell Technologies, which is being paid $158 million. By October, the company will become the sole pharmacy benefit manager for the Medicaid program. The state-supervised single PBM will replace the multibillion-dollar private sector conglomerates such as CVS Caremark and Express Scripts that generated extensive controversy.

1 comment

1 Comment

The first thing wrong is paying a consultant $158 million to write a new contract. The state got taken to the cleaners on that one. The second problem is a drug pricing survey when NADAC is readily available to all states. The third is setting a professional fee without surveying pharmacies to determine an average cost to dispense. There maybe more but this what I found in reading the article.

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