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Yost promises more action against pharmacy middlemen: 'They took our money'

Feb. 19, 2019

Ohio's first steps toward legal action against pharmacy middlemen are far from its last, Attorney General Dave Yost said Tuesday.

With a change in governors, the new attorney general predicted more transparency and accountability for companies handling billions of dollars worth of drug transactions.

Yost was speaking at an Associated Press legislative preview about his office's first steps to claw back almost $16 million that the Ohio Bureau of Workers' Compensation has paid OptumRx to handle the agency's pharmacy benefits.

"I get the question from time to time, 'Are there any other shoes to drop?' Baby, we're in DSW," Yost said, making a reference to the Designer Shoe Warehouse.

Along with CVS Caremark, OptumRx does a far more lucrative business on behalf of Ohio Medicaid than it did on behalf of the workers' compensation bureau. The agency fired OptumRx after an analyst determined that the company was overcharging the bureau. Yost said his office determined that OptumRx violated its contract by failing to timely pass along savings as prices of generic drugs dropped.

"In other words, if the price of a drug goes down, they're supposed to lower their price to the bureau of workers' comp," Yost said. "What we found is that they played the float and that they would wait a month or two or even longer before they would pass the savings on according to the contract."

He added: "They took our money."

OptumRx didn't respond to a request for comment Tuesday.

Yost became attorney general in January. Before that, as state auditor, he took several steps to investigate pharmacy benefit managers, which bill insurers, pay pharmacists and negotiate rebates and other matters with drug manufacturers. Incoming Auditor Keith Faber said Tuesday he will continue to push lawmakers to implement a list of recommendations Yost included in an audit last year to bring more accountability to PBMs.

On Tuesday, Yost said that as attorney general he would continue to investigate PBMs. He added that he expected to be more productive because former AG Mike DeWine is now governor.

"We pulled back the curtain on certain practices, but other things are still opaque," Yost said. "The current governor is a good deal more transparent about the data behind these things and is more cooperative than the previous administration."

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As a possible example, Healthplan Data Solutions, the firm that analyzed OptumRx's deal with the workers' comp bureau also looked at the deals OptumRx and CVS Caremark had with the Ohio Department of Medicaid. But the workers' comp analysis looked at manufacturer rebates while the Medicaid review didn't.

The Medicaid department spends roughly 30 times as much through PBMs as workers' comp does, so the rebates the Medicaid PBMs collect from manufacturers are surely far higher than the $3.25 million collected by workers' comp in 2017.

So why weren't Medicaid rebates analyzed?

Healthplan Data Solutions' "contract with Medicaid didn't permit us to look at rebates," said Ryan Steubenrauch, a spokesman for the consultant.

Yost said, "I would have to defer to the Department of Medicaid and the prior administration (of John Kasich) to answer that question."

Tom Betti, a spokesman for the Medicaid department, didn't answer directly when asked why rebates weren't analyzed.

“As you may be aware, Governor DeWine has directed Ohio Medicaid to provide any data and information that the attorney general needs during his investigation," he said. "We are in support of the attorney general’s efforts and look forward to strengthening our working relationship for the best interests of Ohio taxpayers.”

For his part, Yost said he would investigate all PBM contracts involving the state.

"We're looking at the entire space," he said. "The people in Ohio have been taken advantage of and I'm going to seek redress. I'm going to seek justice. And I want our money back."