Oct 8, 2019

Medicaid programs willing to boot out drug pricing middlemen

Pharmacy benefits are changing in many state Medicaid programs. Photo: Scott Olson/Getty Images

Michigan's Medicaid program is proposing to fire the pharmacy benefit managers that handle its prescription drug claims and negotiate prices. The state would manage drug coverage itself, starting Dec. 1.

The big picture: More state Medicaid agencies have determined that outsourcing all negotiations and operations of prescription drugs to PBMs has not produced the dramatic savings they were promised.

Details: Michigan officials said in a bulletin the state could extract bigger rebates from pharmaceutical companies and cut administrative costs if the state handled all Medicaid medication benefits, instead of the current private contractors.

  • Michigan would use Magellan as its sole drug claims processor.
  • A spokesperson for the Michigan Department of Health and Human Services said the proposal would save $40 million, and officials "will be reviewing the feedback carefully to determine next steps."
  • CVS Health, OptumRx, MedImpact and a handful of other PBMs stand to lose business.

Between the lines: State governments, along with pharmacists, continue to lead the crusades against PBMs.

  • A recently signed California regulation will shift all Medicaid drug benefits away from PBMs by 2021, and West Virginia's Medicaid department fired its PBMs in 2017.

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Why it matters: President Trump threatened this week to deploy military forces if state and local governments aren't able to squash violent protests. Axios reported on Tuesday that Trump is backing off the idea for now, but that he hasn't ruled it out.

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Largely peaceful protests over the death of George Floyd and other police-related killings of black people continued Wednesday, marking nine straight days of demonstrations.

The latest: As several major cities moved to lift curfews, NYPD officers "aggressively" dispersed large crowds in Brooklyn and Manhattan beyond New York City's 8 p.m. curfew, per the New York Times. The National Guard was stationed outside many protests Wednesday night, including in Hollywood and Atlanta.

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President Trump speaks at the White House. Photo: Doug Mills - Pool/Getty Images

President Trump unloaded on his former defense secretary via Twitter on Wednesday, hours after James Mattis condemned him for making a "mockery of our Constitution" in his response to mass protests in the wake of George Floyd's killing.

What he's saying: "Probably the only thing Barack Obama & I have in common is that we both had the honor of firing Jim Mattis, the world’s most overrated General. I asked for his letter of resignation, & felt great about it. His nickname was 'Chaos', which I didn’t like, & changed it to 'Mad Dog'"