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Lawmakers resume push for transparency, end to gag rules by pharmacy middlemen

Feb. 12, 2019

Two state legislators are moving quickly to take care of unfinished business in state efforts to crack down on the costly practices of pharmacy benefit managers.

Reps. Scott Lipps, R-Franklin, and Thomas E. West, D-Canton, have reintroduced legislation aimed at lowering prescription drug costs by increasing price transparency for both consumers and pharmacists.

The House passed the legislation unanimously last year, but after receiving an initial hearing in December, it failed to clear the Senate before the two-year session ended Dec. 31.

Legislators' efforts to rein in pharmacy benefit managers, or PBMs, come a week after Gov. Mike DeWine ordered the Department of Medicaid to rebid contracts with managed care companies that hire PBMs to negotiate drug prices with manufacturers and rates paid to pharmacists to fill prescriptions.

DeWine and other critics say the PBM system of secret "spread pricing," manufacturers rebates and fees has allowed them to profit from the health insurance program for the poor and disabled at taxpayers' expense. Medicaid's two PBMs, CVS Caremark and OptumRX, deny accusations that they are "ripping off" the state, arguing that they are instead saving taxpayers money.

Lipps and West's bill would make permanent in state law the regulations imposed on PBMs last year by the Insurance Department. Specifically, the bill would prohibit PBMs from directing pharmacists to charge patients more than the price of a drug without insurance, and ban "gag rules" that prevent pharmacists from telling their customers about cheaper options for buying medication, such as paying out of pocket.

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The cost-inflating practices allow PBMs to increase their profits and drive up health-care costs, the legislators say.

“We remain determined to expose and stop the malicious and greedy practices utilized by PBMs to hurt our citizens and Ohio’s budget," Lipps said. "Gov. DeWine and his administration are keenly aware of the millions of dollars PBMs have siphoned out of Ohio. It is time for all of us, including the legislature, managed care organizations and Medicaid, to work together and fix this.”

Sen. Dave Burke, R-Marysville, said the Senate ran out of time to consider the legislation last session, but as a pharmacist, he is well aware of the problem.

"I just had one the other day, $30-something was the cash price, and insurance wanted to charge more than $100 for a generic medication," he said. "I was stunned. I've never seen one so blatant."

Burke said his customer opted to pay out of pocket.