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BREAKING: State budget deal boots PBMs and reinvests in Ohio pharmacies!

Today, key members of the Ohio Senate and House of Representatives announced that after months of debate and negotiations, that they have finally reached an agreement on the state budget bill.

As we have mentioned, key pieces of Medicaid PBM and pharmacy reform were hotly debated between both House and Senate leaders. Even Governor DeWine's office and the Department of Medicaid have been in talks over which direction the state should go in its quest to repair Ohio's broken pharmacy benefits program within Medicaid managed care.

OPA has done absolutely everything we could to pull the rug out from under the status quo, knowing how the warped incentives, below-cost reimbursements, and conflicts of interest had shredded pharmacy staffing levels and crushed local pharmacy access.

While we are still reviewing final budget language, we wanted to give you the highlights that we're aware of at this moment:

  • Instead of the current PBM makeup in Medicaid managed care, the state would hit the reset button and contract with a single PBM for the entire program.
  • After years of pharmacy margin attrition due to PBM spread pricing, the state has reinvested $100 million in supplemental dispensing fees for pharmacies over the biennium.
    • The fees shall be distributed in a weighted fashion with higher fees going to pharmacies with a high percentage of Medicaid claims and pharmacies in low-access parts of the state.
  • The state PBM would have strict transparency and revenue disclosures, including disclosure of all direct and indirect fees charged to pharmacies.
  • The state PBM, in coordination with the Department of Medicaid, would develop a single drug formulary for the state.
  • In an effort to prevent self-dealing, the state PBM will be required to disclose all conflicts of interest, including ownership interests and affiliations.
  • In the event of any MAC pricing disputes, pharmacies can seek remedy directly with the Department of Medicaid, creating a backstop for drug pricing squabbles.
  • The state PBM cannot force patients to use its own specialty pharmacy.
  • The state PBM will be required to disclose all drug pricing arrangements and rebate deals with drug manufacturers and distributors.

Overall, we’re still reviewing the details, but on its surface, we are thankful to the House and Senate for rolling up their sleeves and putting serious thought into these PBM issues. While we have some concerns with the possible collateral damage of dealing with a new PBM with monopolistic power in the Medicaid program, we believe that the legislature’s reinvestments in Ohio pharmacies are a sign that there’s an expectation that the future will be sustainable and protect access. This was a glaring need that had to be addressed, and we applaud to the legislature for doing so.

We still strongly believe that PBMs with conflicts of interest in the pharmacy marketplace should not have price-setting capabilities, and until that is resolved, both the state and its providers will be vulnerable to be taken advantage of. We are eager to work with lawmakers, Medicaid officials, managed care plans, and Governor DeWine in picking up the pieces from Ohio’s broken PBM mess, rebuilding the pharmacy program, and realigning the incentives to drive better value for taxpayers and create a new, outcomes-driven model for other states to follow.

We will update members soon with complete details, but for now, please see the Columbus Dispatch's write-up on the pharmacy and PBM portions of the budget bill here. The Dispatch has been instrumental in holding state officials accountable over the last year and half to get this mess fixed.

We'd like to thank Senate President Larry Obhof, House Speaker Larry Householder, and Governor Mike DeWine for prioritizing these issues and seeking out our input. There were also a litany of lawmakers working hard to push for reform in both chambers and both sides of the aisle. We'll be updating you on all the lawmakers who were involved in the fight, along with complete bill details soon.

Thank you for your support in our fight to fix Ohio's Medicaid pharmacy system!

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