Ohio Attorney General Dave Yost announced he is seeking the repayment of almost $16 million paid to the pharmacy benefit manager (PBM) OptumRx, after the company overcharged the state government for drugs.
Yost said that he will take the PBM to nonbinding mediation, as required in its contract. If that mediation fails, then the case will probably go to court. In his letter to Optum, Attorney General Yost wrote that the PBM overcharged Ohio's Bureau of Workers' Compensation by $6 million in 2015, by $2.7 million between January and October 2017, and by $7.2 million between November 1st, 2016 and October 27th, 2018.
Last May, the Bureau of Workers' Compensation performed its own analysis and found that they were being ripped off-according to the analysis, in 2017 Optum overcharged them by $5.7 million. As a result, the Bureau fired Optum, and Yost is now considering legal action against the company.
What happened? PBMs act as middlemen between drug companies, health insurance companies, and pharmacies, and they are supposed to use their power to lower drug costs and make better deals. But critics say (and evidence suggests) that PBMs use their size and a lack of transparency and accountability to drive up drug costs so they can make greater profits.
In this case, OptumRx failed to manage the effective rate of the Bureau's maximum allowable cost list to achieve the discounts against the average wholesale price the PBM promised, and OptumRx wrongfully increased prices charged to the Bureau. This is not the only case of Optum's misbehavior in Ohio; we have previously written about how the PBM was overcharging Ohio's Medicaid program by failing to pass to timely pass along savings when generic drug prices declined.
And Yost declared to the reporters that he would take further actions against PBMs. He told reporters that "if the price of a drug goes down, they're [PBMs] supposed to lower their price to the bureau of workers' comp. What we found is that they played the float and that they would wait a month or two or even longer before they would pass the savings on according to the contract. They took our money."
State Attorneys General have substantial powers to protect consumers and ensure that markets are competitive. They should follow Ohio's example and use them to stop PBM abuses and make sure that PBMs actually lower drug costs.