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Disclosure

There are no relevant financial relationships with ACCME- defined commercial interests for anyone who was in control

• f the content of the activity.

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Following the Yellow Brick Road to Medicaid Reform

There’s no place like home to impact change

NCPA 2019 Annual Convention

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Pharmacist and Pharmacy Technician Learning Objectives:

• Discuss components of Medicaid managed care programs

and the impact on taxpayer dollars.

• Discuss strategies for educating legislators, Medicaid

administrators, or other officials about pharmacy-related advocacy initiatives.

• Identify opportunities to educate patients and the

community about pharmacy-related advocacy initiatives via social media.

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Medicaid managed care reform

Measurements:

• Introduced Legislation
• Fee-For-Service Floor Reimbursements
• Drug Benefit Carve-Out
• Elimination of Spread Pricing
• Transparency
• Enacted Legislation
• Adopted Regulations
• Investigations/Reports/Lawsuits

(Before Jan. 2019) (Jan.-Oct. 2019)

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Medicaid Managed Care Reform News!

• West Virginia: Saved $54.4 million in one year by carving pharmacy benefits out of managed care
• California and Michigan: Taken administrative steps to carve pharmacy benefits out of managed

care in an effort to save taxpayer dollars.

• Pennsylvania: Between 2013 and 2017, the amount that taxpayers paid to PBMs for Medicaid

enrollees more than doubled from $1.41 billion to $2.86 billion.

• Ohio: The state Auditor found that, of the $2.5 billion that’s spent annually through PBMs on

Medicaid prescription drugs, PBMs pocketed $224.8 million through the spread alone during a one- year period. Pharmacy reimbursements increased over $38 million in one quarter after implementing pass-through contracts.

• Ohio AG Yost has filed a lawsuit against OptumRx
• Alleges OptumRx overcharged the state nearly $16 million for prescription drugs in the Ohio

Bureau of Workers’ Compensation program

• Kentucky: In response to a state report that found state PBMs keep $123.5 million in spread

annually, the Attorney General has launched an investigation into allegations that the PBMs have

• vercharged the state and discriminated against independent pharmacies.

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Current PBM Reform Legislative Initiatives: Momentum in the States

• 21 states have passed 27 bills…so far in 2019!
• 12 states introduced bills based on the NCOIL model bill…so

far…

• 5 passed
• 48 states have introduced legislation to regulate PBM

activity in the 2019 State Legislative Calendar.

• In May, CMS issued guidance, effectively eliminating the spread

abuse in Medicaid Managed Care!

• Prohibits any of the “spread” from being designated as medical

costs in calculating a managed care plans’ Medical Loss Ratio (MLR)

• Huge win for states, taxpayers and community pharmacy

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Eric Pachman President, 46Brooklyn Jason Rapert Arkansas State Senator Steve Moore, PharmD Owner, Condo Pharmacy Moderator, Karry La Violette, SVP Government Affairs and Director of NCPA's Advocacy Center

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Arkansas State Senator Jason Rapert

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How data analytics kicked off a nationwide firestorm on spread pricing

Eric Pachman

3 Axis Advisors, 46Brooklyn Research

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2016 – An ugly introduction to pharmacy

• Ohio Medicaid managed care in mid-2016
• Five managed care plans
• Two PBMs – CVS/Caremark and OptumRx
• 100% “traditional” (euphemism for “spread”) contracts
• Managed care dominates the state
• August 1, 2016 – Day 1 on the job as President of a chain of 22 community

pharmacies (20 in Ohio)

• (Very) small pharmacies
• Mostly located in rural communities
• Heavy Medicaid managed care
• My start date coincided with the beginning of extreme margin pressure in Medicaid

managed care

• Generic margins fall to under $1 per prescription Summer 2016
• No material changes to generic margins in Medicare or Commercial

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Riding the Ohio Medicaid managed care rollercoaster

Not Medicaid Managed Care Medicaid Managed Care

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Generic Name All Other Plans MCO Medicaid Plans MCO Medicaid Reimbursement Discount AMLODIPINE 10MG TABLET $0.194 $0.031

• 84%

AMOXICILLIN 500MG CAPSULE $0.180 $0.093

• 48%

ATORVASTATIN 20 MG TABLET $0.414 $0.158

• 62%

ATORVASTATIN 40 MG TABLET $0.453 $0.154

• 66%

AZITHROMYCIN 250 MG TABLET $1.291 $0.452

• 65%

CITALOPRAM HBR 20 MG TABLET $0.201 $0.044

• 78%

CLOPIDOGREL 75 MG TABLET $0.491 $0.085

• 83%

FLUTICASONE 50 MCG NASAL SP $0.859 $0.877 2% FUROSEMIDE 40 MG TABLET $0.062 $0.022

• 65%

GABAPENTIN 300 MG CAPSULE $0.133 $0.048

• 64%

HYDROCODON-APAP 5-325 $0.235 $0.280 19% LISINOPRIL 10 MG TABLET $0.114 $0.030

• 74%

LISINOPRIL 20 MG TABLET $0.118 $0.032

• 73%

METFORMIN HCL 1,000 MG TAB $0.097 $0.035

• 64%

METOPROLOL TART 25MG TABLET $0.065 $0.033

• 49%

METOPROLOL TART 50MG TABLET $0.068 $0.026

• 62%

MONTELUKAST SOD 10 MG TAB $0.355 $0.196

• 45%

OMEPRAZOLE D/R 20MG CAPSULE $0.238 $0.063

• 74%

OMEPRAZOLE D/R 40MG CAPSULE $0.464 $0.130

• 72%

SERTRALINE HCL 100 MG TAB $0.181 $0.060

• 67%

SERTRALINE HCL 50 MG TABLET $0.226 $0.059

• 74%

SIMVASTATIN 20 MG TABLET $0.207 $0.038

• 82%

SULFAMETHOAZOLE-TMP DS TAB $0.229 $0.075

• 67%

TAMSULOSIN HCL 0.4 MG CAP $0.484 $0.198

• 59%

TRAMADOL HCL 50 MG TABLET $0.097 $0.025

• 74%

Average $0.298 $0.130

• 61%

Same drug, different price

• We studied the top 25

generic NDCs dispensed in

• ne month
• All but two of the top 25

dispensed generic NDCs were reimbursed at a steep discount to “All Other” Plans

• The average “discount” on

these drugs was a staggering 61%

• When the cost is taken

into account, pharmacy margin on these drugs was 78% lower when dispensed on MCO Medicaid compared to another plan Revenue per Unit for Top 25 Generics Dispensed in One Month

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• Margin per script for MCO Medicaid is

heavily “skewed” to the downside

• Of all scripts on MCO Medicaid,

nearly half made less than $1 in gross margin

• Only 7% of scripts met the ~$13

breakeven cost to dispense*

Lucky to get a couple bucks

Margin per Script for all MCO Medicaid Claims

One month in 2017

93% of all scripts dispensed on MCO Medicaid in one month did not cover

• perating costs

Margin per Script % of Claims

Make above $13 7% Make between $5 and $13 8% Make between $1 and $5 38% Make $1 or less 43% Negative Margin 4%

* 2016 Ohio Medicaid dispensing fee survey arrived at ~$13 as the breakeven cost for small pharmacies

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So pharmacy is getting crushed – is the state at least saving money?

Generic drug unit cost went from $22.10 in FY16 to $22.50 in FY17 – up 2%

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Putting it all together – something is very wrong here

100% 102% 101% 76%

70% 80% 90% 100% 110% 120%

FY2015 FY2016 FY2017

Gener eneric C Cost/Reve venu nue p per er Scrip ipt Normalized d to to 1 100% in F FY2015 015

OH Medicaid Cost per Script Estimated OH Pharmacy Reimbursement per Script

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A confluence of many factors leads to change in 2018

Data Analysis This guy

+ + +

JMOC

= +

Dave Yost

Ohio’s managed care PBMs took $208 million (31%) in spread in one year just off generic drugs!

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46brooklyn formed to shed light on drug pricing distortions

• Studying why generic drug prices were so

disconnected from their actual cost became an obsession…

• … which ultimately resulted in me leaving

pharmacy in July 2018 to study the drug supply chain full time

• 46brooklyn Research was formed in

August 2018 to: 1. Improve the accessibility and usability

• f public drug pricing data

2. Provide original research to the public explaining the drug supply chain 46Brooklyn Research is a 501(c)(3) non- profit that provides all content free of charge to the public

Medicaid Markup “Viz”

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Over The Next 13-months 46brooklyn…

• Developed and published ten different data visualizations
• Published fourteen in-depth drug pricing research reports
• Published an additional ten pricing analysis articles
• Referenced in 50+ media articles by 25+ different media
• utlets

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And then Pharmacists Society of the State of New York (PSSNY) called…

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… which led to our first view of Medicaid spread pricing outside of Ohio

(and the formation of 3 Axis Advisors)

St Study found 32% 32% mark rkup on NY Y gener eneric drug ugs in n 2017

Source: https://www.bloomberg.com/news/articles/2019-01- 24/drug-middlemen-got-hefty-markup-in-new-york-pharmacy- group-says

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The evolution of spread in New York Medicaid MCO

$0.38 $0.40 $0.42 $0.38 $0.39 $0.36 $0.35 $0.38 $0.38 $0.37 $0.35 $0.34 $0.33 $0.30 $0.26 $0.23 $0.30 $0.29 $0.28 $0.25 $0.27 $0.25 $0.23 $0.22 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

NY: COMPARISON OF PER UNIT COSTS FOR GENERIC ORAL SOLIDS

MCO Paid Pharmacy Received NADAC

Yeah, but you only had data from 11 pharmacies!

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The evolution of spread in Michigan Medicaid MCO

$0.23 $0.23 $0.23 $0.24 $0.24 $0.24 $0.24 $0.25 $0.23 $0.23 $0.22 $0.20 $0.19 $0.18 $0.16 $0.16 $0.19 $0.19 $0.18 $0.17 $0.17 $0.16 $0.15 $0.15 $0.10 $0.12 $0.14 $0.16 $0.18 $0.20 $0.22 $0.24 $0.26

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

MI: COMPARISON OF PER UNIT COSTS FOR GENERIC ORAL SOLIDS

MCO Paid Pharmacy Received NADAC

Add 440 more pharmacies to the study  get same conclusion

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Don’t take our word for it – Kentucky found $124 million

• f spread on its own

12. 12.9% 9% o

• f
• ver

erall s spend! pend!

(Ohi hio w

• was 8.9%)

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Meanwhile, PBMs have moved onto Generic Effective Rate (GER)

Pharmacy Margin versus GER

1) GER contract guarantees pharmacy set discount to aggregate AWP 2) There is no relationship between a drug’s AWP and its acquisition cost 3) Pharmacies experience extreme variation in margin simply based on drug mix

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DC is attempting to permanently fix such Medicaid MCO/PBM pricing games in one fell swoop

• Section 206 mandates Fee for Service pass-through reimbursement

methodology (ingredient cost plus professional dispensing fee) across ALL of Medicaid

• Also improves NADAC by making survey mandatory

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What about Medicare Part D and Commercial?

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Get off the bench

Steve Moore, PharmD Owner, Condo Pharmacy

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Steve Moore, PharmD

• Steve Moore is a pharmacist from Plattsburgh, NY where he and his family own

Condo Pharmacy, a community pharmacy that provides traditional, long term care, compounding, and specialty pharmacy services. The pharmacy is part of the CPESN USA network of pharmacies and offers enhanced pharmacy services and care management protocols to interested parties. The pharmacists also team with other health care providers and insurers to provide clinical care services such as annual wellness visits, chronic care management, and transitions of care services from both inside and outside the pharmacy.

• Steve is a graduate of the Ernest Mario School of Pharmacy at Rutgers University and

currently serves on the board of PSSNY as its President, is a luminary for CPESN, and is a member of the NCPA State Legislative Committee.

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What Happened in New York?

• PSSNY 2019 Legislative Session, January 1st through June 26th
• January 24th PSSNY Report on Spread Pricing in NY MMC program by 3Axis Advisors
• February 5th Testimony at budget hearing
• March 5th Lobby Day
• April 9th Lobby Day (~500 students)
• March 14th NCOIL meeting
• May 14th FixRx Rally
• May 28th Testimony on New York Health Act (Single Payer)
• June 3rd Report on PBMs by Senator Skoufis
• PSSNY Resources
• Pharmacy Patient’s Right to Care (Legislative Agenda)
• FixRx

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It was a busy year with more than 350 bills related to pharmacy introduced…

• Governor’s Budget
• Spread pricing prohibited in MMC
• Comprehensive Contraception Act
• Passed both Senate and Assembly
• PBM licensure and registration (S6531-Breslin/ A2836- Gottfried)
• Controlled Substance Partial Fill (S1813-Rivera/A3918-McDonald)
• Prohibit Mid-Year Formulary Changes (S2849-A-Breslin/A2969-Peoples-Stokes)
• Med Sync for Medicaid beneficiaries (S3119-A-Hoylman/A2785-A-Gottfried)
• Med Sync for Commercial Insureds (S4078-Breslin/A3009-Quart)
• Eliminate religious exemption for immunizations (S2994-Hoylman/A2785-A Gottfried) - signed
• Registered Pharmacy Technicians in Article 28 facilities (S6517-Stavisky/A8319-Romeo)
• Class 1 Recalls (S5091-Comrie/A4781- Rosenthal,D)
• Electronic prescribing not required for certain facilities (S4183-Rivera/A-1034-A Gottfried)

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So what did we actually accomplish?

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What can pharmacists do?

1. Know your legislators and get them into your pharmacy

• We cannot only see legislators in the state capital and/or Washington, D.C.
• Don’t discount legislators at local level

2. Know your ask and know your data*

• Understand what it is you are actually asking for and what that means to other stakeholders

3. Know your legislators 4. Know your community

• Social Media

5. Know your legislators 6. Know your colleagues 7. Know your legislators

*Working with an Eric Pachman makes this much easier

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Eric Pachman President, 46Brooklyn Jason Rapert Arkansas State Senator Steve Moore, PharmD Owner, Condo Pharmacy Moderator, Karry La Violette, NCPA Director of Advocacy Center

Panel Discussion

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