In its latest effort to lower drug costs, the Centers for Medicare & Medicaid Services released guidelines for states to get transparent reports from Medicaid and Children’s Health Insurance Program (CHIP) managed care plans. The guideline proposes to help states audit and monitor the real drug costs for Medicaid and CHIP. The guidelines released on May 15th require managed care plans to include third-party rebates from pharmacy benefit managers (PBMs) when calculating their medical loss ratio (MLR). States like Ohio and Texas have already exposed this spread pricing where PBMs can negotiate contracts with third parties in order to charge a managed care plan more for a drug than it reimburses a pharmacy. If more states can routinely audit and monitor for spread pricing, then we can expose the unnecessary costs passed on to the state and taxpayer while the only one benefiting is the PBMs. Thankfully, the folks in Washington are smelling the stench of this peeling onion and hopefully will create and pass bills, like the bill written by Senator Mike Braun of Indiana, that remove the safe harbor for PBMs and also Group Purchasing Organizations (GPOs).
Anyone think this will work?