Another State Calls it Quits with Pharmacy Benefit Managers

October 17, 2019

Michigan Medicaid has a message for the state’s pharmacy benefit managers: This isn’t working.

The state may cut ties with its prescription drug middlemen effective December 1, according to Axios news.  Michigan Medicaid would then manage operations and negotiations with pharmaceutical manufacturers itself.

Why the proposed break-up?  The pharmacy benefit managers, including OptumRx, MedImpact and CVS Health, haven’t delivered the savings Michigan expected.  In fact, the state estimates it could actually save $40 million by doing the work itself rather than contracting with pharmacy benefit managers.  The savings would come largely from cutting unnecessary administrative costs and doing a better job negotiating with manufacturers.

Michigan isn’t the first to consider going it alone.  In 2017, West Virginia Medicaid ended its partnership with pharmacy benefit managers.  California looks to do the same by 2021.

The trend could be positive for patients.  From cardiovascular care to migraine disease to diabetes, pharmacy benefit managers’ promise to lower costs has seldom come to fruition.  Instead, the companies’ drive for higher rebates has driven up prescription drug list prices, resulting in higher out-of-pocket costs for patients to get their medication.

Between the growing patient access barriers and skepticism about actual cost savings, scrutiny about pharmacy benefit managers continues to rise.  Several states, such as Kentucky and Ohio, have taken an official look into PBMs’ operations.  The U.S. Senate held hearings on the topic earlier this year.

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