Ohio AG calls for new PBM transparency law, saying state 'hired a fox to guard the henhouse'

Ohio’s attorney general is continuing his war on pharmacy benefit managers, this time by proposing a multistep plan to improve transparency and lower drug costs. 

AG Dave Yost announced the four-piece proposal and called for swift action from the state’s legislature to shine greater light on PBM contracts in Medicaid and cut down on centralization. 

Yost has been a loud critic of PBMs following the release of a report last summer in his previous role as state auditor that highlighted spread pricing practices in Medicaid. PBMs operating in Ohio Medicaid earned nearly $225 million through spread pricing between April 2017 and March 2018, the report found. 

The state cancelled all PBM contracts in Medicaid that use spread pricing as a result. 

“When state agencies entered into these nebulous deals with PBMs, they unknowingly hired a fox to guard the henhouse,” Yost said in a statement. “But he was a smart fox. He didn’t kill the chickens—he helped himself to the eggs.” 

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Yost’s proposal calls for: 

  • Drug purchases in the state to be conducted under a master PBM contract that is administered by a single contact point,
  • Ohio’s Auditor of State to have full power to review all PBM contracts, purchases and payments,
  • PBMs to operate as fiduciaries, and
  • The state to prohibit nondisclosure agreements on drug pricing.

Yost said that these provisions would shine a light on what PBMs are doing without creating additional bureaucracies and administrative inefficiencies. The goal is for a “market-based solution” to drive greater transparency, he said. 

Yost has also taken legal action against Optum, suing to claw back $16 million in what he says are drug overpayments the PBM charged to Ohio’s Bureau of Worker’s Compensation. 

Optum said the allegations are “without merit.”