West Virginia’s system possible model for cheaper Medicaid drug prices

(The below is part of an article from the Columbus Dispatch newspaper December 10, 2018)

Ohio is struggling to bring transparency to the $2.5 billion its Medicaid system spends through its managed-care plans on prescription drugs each year. As it does that, one of its neighbors decided to take a drastically different path: Cut out the PBMs altogether.

West Virginia’s model puts health care outcomes over profits by using the West Virginia University School of Pharmacy’s Rational Drug Therapy Program to recommend drugs for patients. That saved the state $30 million in one year

Could a larger state such as Ohio do the same? Those who have run a couple of models express confidence that they can do it in Ohio. The Cleveland Clinic Pharmacies and the Ohio State University Wexner Medical Center manage their own formularies, which is the list of drug approved by a panel of experts for patient care.

In most states that use managed care, those formularies are controlled by pharmacy benefit managers (PBMs), the middlemen in the pharmacy supply chain whose stated purpose is to control prescription drug costs.

To determine just how good — or bad — a deal Ohioans are getting from the PBMs hired by its managed care plans, Ohio Medicaid officials are trying to get behind the many curtains that obscure what’s happening. It’s moving to a “pass through” model in which PBMs must charge taxpayers exactly what they pay pharmacists, plus a set fee.

Revelations this year by The Dispatch, the legislature, the state auditor and the Ohio Department of Medicaid have shown that PBMs such as CVS Caremark are collecting from manufacturers behind the veil of near-complete secrecy.

But even thought the managed-care plans are supposed to work for the state, Ohio Medicaid reportedly is facing resistance from the PBMs as it tries to build in protections for non-CVS pharmacies, who report taking a beating under the existing system.

That’s a headache West Virginia doesn’t have to deal with. Faced with increasing costs in 2017, and already spending $650 million a year on prescription drugs, officials there decided they could do better without the plans and their hand-picked PBMs, which included CVS Caremark.

“They felt the cost was not sustainable,” said Vicki Cunningham, West Virginia Medicaid’s director of pharmacy services, about the position of state financial officials. So, she said, West Virginia got back to basics.

“The system we have now is the system we had before we carved pharmacy into managed care,” she said.

West Virginia turned to experts at the West Virginia University School of Pharmacy’s Rational Drug Therapy Program to approve the use of drugs and consult with doctors and pharmacists. For example, they advise providers and make decisions when it’s best to use off-formulary drugs — even though they might cost more and might not come with rebates.

“The faculty at the school are clinically, well-informed individuals who make appropriate clinical decision — not high-cost financial incentives that third parties pursue,” said WVPA Executive Director Richard Stevens during an interview with the Columbus Dispatch.