Ohio Medicaid Got Rid of Big Middlemen. Says it Paid Pharmacies a lot More — and Saved $140M

Pharmacy middlemen working in Ohio on behalf of huge health conglomerates have long claimed they keep down drug costs. But a report released last week calls that into question. The Ohio Department of Medicaid had been burned in the past by the big middlemen. And pharmacies across the state for years had said their Medicaid reimbursements were so scant that it was hard to stay in business. So the Medicaid department in 2022 gave the big pharmacy benefit managers — or PBMs — the boot and created a new system of paying for drugs.The result: Dispensing fees paid to pharmacies were boosted more than 1,200% on average — and the new setup still achieved savings of $140 million over a two-year period, according to a study done by Milliman, the Medicaid department’s actuarial firm. At the same time, the system managed to sign up nearly every pharmacy in the state, the report said. That makes medicine more accessible to Medicaid patients, who often lack access to reliable transportation.“Bottom Line: The (new system) delivers on its goals of accountability, transparency, and fairness – While doing so at a significantly lower administrative overhead cost to taxpayers,” the Medicaid department said in a cover letter to lawmakers that accompanies the study.