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Issue 2 Offers Uncertainty for Sponsors of Prescription Drug Plans

10/08/17

  08:31:00 pm, by MedBen5   , 337 words,  
Categories: News, Prescription, Health Care Reform

Issue 2 Offers Uncertainty for Sponsors of Prescription Drug Plans

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The Ohio Drug Price Relief Act, better known as Issue 2, has sparked plenty of debate (and earned TV stations a lot of money in ad time). If approved, the initiative would enable the state to buy prescription drugs for Medicaid and state retirement programs at prices comparable to what the U.S. Department of Veterans Affairs (VA) pays for them.

While it is difficult to predict what will happen if Issue 2 passes, the issue is specific in its requirements of the state on drug payments it makes to pharmacies, but short on implementation details. This poorly-worded mixture will likely lead to uncertainty, confusion, and litigation… and while not directly affecting employer-sponsored drug plans, these elements may lead to unforeseen long-term consequences.

If Issue 2 passes and is implemented on its language alone, it’s possible that the following scenario could play out at pharmacies statewide:

  1. The pharmacy buys a medicine at $100.
  2. The state, by mandate under Issue 2, would be required to pay the pharmacy (in this example) the VA price of $75.
  3. The pharmacy will lose money on every one of those prescriptions.

Because pharmacies are unable to “cost shift” to private employers or Medicare – those reimbursements are controlled by the pharmacy benefit managers (PBMs) – the options for that pharmacy include:

  • Shifting cost to the very few “cash” customers (a small proportion of patients);
  • Turning away all patients under state reimbursement (predominantly Medicaid); and/or
  • Close their doors in those markets dominated with Medicaid and poor cash pay customers.

It is likely that if Issue 2 passes, retail pharmacies in poor urban neighborhoods and poor rural counties with heavy Medicaid populations will have to close their pharmacies or turn into “convenience marts” or sundry shops, and these patients, because of limited travel capabilities, will lose access to necessary medicines.

Drug company prices have become a big concern for health plans. The Issue 2 legal mandate will not address those concerns. In fact, it could harm competition and make the situation worse in Ohio.

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