DARREL ROWLAND | THE COLUMBUS DISPATCH
When
the big ball slowly dropped in Times Square to mark the dawn of 2019, something
much less visible happened about 500 miles away: The price tag of specialty
drugs for Ohio’s neediest residents suddenly jumped.
A
prescription for 90 tablets of Capecitabine, a chemotherapy drug, cost about
$1,175 on Dec. 31, 2018. That eye-opening price looked downright cheap next to
the one on Jan. 1, 2019: more than $2,000, a 70% increase.
Sildenafil,
which relieves high blood pressure in the lungs, cost about $31 for a 90 pills
at the end of last year. When this year dawned, the price was eight times as
much, nearly $250.
That’s
nothing compared to the overnight leap for 30 pills of Entecavir: from less
than $45 to more than $900 — 20 times as much for the same package of 30 pills
used to treat chronic Hepatitis B.
Many
other generic specialty drugs showed significant increases as well. Specialty
drugs are typically used to treat such complex conditions as hepatitis, cystic
fibrosis, HIV and some cancers. Sometimes they require special handling, such
as refrigeration.
So why
the big price changes on New Year’s Day?
Critics
provide a simple explanation: New restrictions by the state Medicaid department
starting Jan. 1 spurred pharmacy benefit managers to find a new way to make
money. And specialty drugs were the ticket.
Pharmacy
benefit managers, known as PBMs, serve as middlemen between the state Medicaid
department, which pays for the drugs, and pharmacies, where the drugs are
purchased for the 3 million poor or disabled Ohioans on Medicaid. The PBMs also
essentially set the price paid by taxpayers, via managed-care organizations
hired by the state to administer the Medicaid program.
But
when it comes to specialty drugs, there’s a catch: PBMs often guide purchases
to pharmacies run by the PBMs’ parent company. Thus, when the price Medicaid
must pay for specialty drugs increases, so does revenue flowing to the PBM
companies’ coffers.
Antonio
Ciaccia of the Ohio Pharmacists Association said it’s clear the PBMs’ business
model changed due to the new Ohio Medicaid restrictions at the beginning of the
year.
Previously,
the PBMs used a much-criticized method called spread pricing, which refers to
the difference between what these multibillion-dollar corporations were
receiving from the state and the lesser amount they were paying pharmacies.
That netted the PBMs nearly a quarter billion dollars in a year, a state study
showed.
But the
state outlawed that practice on Jan. 1 in favor of a “pass-through” pricing
model in which the PBMs are supposed to be charging the state the same price
they are setting for the pharmacies that prescribe the drugs.
The
PBMs needed a new way to make profits, so they increased prices for specialty
drugs, Ciaccia said.
The
information about the specialty drug price increases comes from new drug utilization
data for the first quarter of 2019 posted by the Centers for Medicare &
Medicaid Services.
Those
figures confirm Dispatch findings in June from data provided
by some three dozen pharmacies across Ohio.
State
Medicaid Director Maureen Corcoran said the challenge of specialty drug price
increases, and the potential for conflicts of interest with PBMs, is a problem
in many states, not just Ohio.
About
half of Ohio Medicaid’s specialty drug prescriptions currently are filled by
pharmacies with ties to the PBMs or managed care organizations, she said.
Starting
in 2020, Medicaid will require that specialty drug prescriptions cannot be
limited to pharmacies tied to PBMs, but must be made available to any pharmacy
that can fill the prescription at the same or lower cost.
“We’ll
be expecting them to basically not have a single or a sole relationship with a
specialty pharmacy, that we’re expecting that to be a more open network,”
Corcoran said.
Also in
January, PBMs no longer will be the ones to decide which drug is a “specialty”
drug subject to higher prices and potential conflicts of interest. Instead, the
state itself will develop a single preferred drug list.
“You do
want to take out chance for abuse,” she said.
Corcoran
is scheduled to appear before the Joint Medicaid Operating Committee next week
to give state lawmakers an update on their longstanding concerns about PBMs.
A spokesman
for CVS Caremark, which serves as the PBM for the large majority of Medicaid
drug purchases, declined to comment.
But a
spokesman for a national group representing PBMs did.
“The
selected medications are not an accurate portrayal of specialty generic drug
prices in Ohio’s Medicaid program,” said Greg Lopes, assistant vice president
for strategic communications for the Pharmaceutical Care Management
Association. “The specialty medications listed experienced fluctuations in
reimbursement throughout the year, but overall had a decrease in reimbursement
over the 2018 to 2019 one-year period.
“Thus,
a two-quarter analysis is inaccurate, and a more accurate analysis of drug
spending must be conducted over a longer time period than just two quarters.
“In addition,
in Ohio, for the selected drugs there are multiple generic versions and
multiple payers, and so it is not possible to determine which payer reimburses
for a specific drug version.”
Despite
the PBMs' statements, federal data on the cost of prescriptions show the actual
price of many specialty drugs is going down, not up, Ciaccia noted. His partner
in a nonprofit called 46brooklyn Research, former community drug-chain
president Eric Pachman, provided several examples of how price mark-ups that
often already were substantial increased in early in 2019 from late 2018:
• The
cost of a single prescription for 0.5 mg capsules of Tacrolimus, used to
prevent transplant rejections, went from $15.32 to $60.36, a price mark-up
rocketing from 75 cents a prescription to nearly $45.
• The markup for 100 mg of leukemia chemotherapy drug Imantinib
Mesylate jumped $274 a prescription, increasing from 491 percent to 572 percent
of the federal average price.
• A script for 1 mg of Entecavir showed an increased mark-up of
$552, growing from 284 percent to 1,394 percent.
• A $425 rise in the mark-up occurred for a prescription of 500
mg Capecitabine, swelling from 431 percent to 683 percent.
Ciaccia's
conclusion: "You have the price of a drug going down, and the amount
charged to the state increase."
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