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News
Your source on union-negotiated health care
benefits
State to carve out drugs to Express Scripts,
leaving Medco July 1, 2004; Change impacts Ohio Med PPO enrollees
Feb. 26, 2004 -
One of the issues the union raised in bargaining last time was that the
state really had not done all it could do to keep health care costs down.
We asked the state to consider joining multi-state purchasing coalitions.
After a thorough review on July 30, the JHCC recommended
to the Director of DAS that the state join the RX Issuing States (RxIS)
multi-state drug purchasing coalition for the 42,000-plus Ohio Med PPO
enrollees.Joining the coalition will save about $15 million in premium
costs on the drug spend over the next three years.
More importantly this new contracting arrangement will
allow us to better monitor how drugs are priced as the new PBM will reveal
much more about what it pays for drugs and in most cases will not mark
them up as Medco does.
The RxIS agreement allows us to pool resources with
the other states to actually audit the Pharmacy Benefits Manager (PBM).
This will allow us to really know what we are paying for drugs. No one
is doing this in the country currently.
By making this change, Medco will no longer be the PBM
for the Ohio Med PPO; It will be Express Scripts, also called ESI. The
benefits will be the same with regard to co-pays. The JHCC also has examined
their network to make sure it matches ours and many folks don't have to
switch pharmacies on the retail side. The match is nearly perfect.
Employers pay PBMs an administrative fee to administer
drug claims and to negotiate the best drug price for them from the pharmaceutical
manufacturers. The problem is that most PBMs refuse to reveal to their
clients the price at which they secure the drug. The PBM then adds an
additional (though hidden) cost to the drug.
The PPB does this in a rather complicated fashion by
not revealing the true discount they received from the pharmaceutical
company. The PBM, of course, pockets the hidden fee as pure profit on
top of the admin fee they collect. PBMs artificially inflate drug prices
and then pocket that inflated amount—all while getting paid an administrative
fee to secure the lowest possible price for the employer.
Sound like a contradiction? It is.
Medco too has decided to fight the state about this
change and has put lots of pressure on the Governor to not make this change.
The Governor has decided to back the JHCC decision.
This matter will go to the Controlling Board in March
or April where the final okay is given to make this switch.
Update: The controlling board approved this
PBM switch on March 22, 2004.
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