CVS Health issued the following announcement on June 21.
CVS Health (NYSE: CVS) is pleased that a report issued today that was commissioned by the Ohio Department of Medicaid (ODM) on pharmacy benefit manager (PBM) performance for the state's Medicaid managed care plans confirms that our PBM, CVS Caremark, does not provide preferential pricing to CVS Pharmacy that would create an anti-competitive advantage over independent pharmacies.
The report's analysis of our claims data clearly shows that CVS Caremark reimburses independent pharmacies at a higher rate than CVS pharmacies are reimbursed, and that CVS Caremark pays a higher dispensing fee to independent pharmacies than it pays to CVS pharmacies.
We believe CVS Caremark's "spread" of 8.70% - which is significantly lower than was previously reported by news media that used only selective samples - is very reasonable, given that this pricing model is in lieu of our managed care clients paying an administrative fee for the PBM services we provide, and it provides our clients with stability and certainty around their drug costs by guaranteeing their rate. A significant portion of the "spread" we receive pays for vitally important clinical services and other benefit management services we provide to clients.
It is important to note that in 2017, CVS Caremark's overall net profit margin was only 3.5%, and in the first quarter of 2018 it was just 2.4%.
The report raises interesting questions about the benefit of managed Medicaid plans moving to a "pass-through" pricing model. We agree with the report's recommendation that more analysis is needed. The report's data analysis concludes that under the Managed Care model, Ohio's Medicaid program saved $145 million annually in prescription drug costs as compared to its former fee-for-service pricing model.
Ultimately, clients choose the pricing option that best meet their individual needs. We look forward to discussing this report in more detail with our managed Medicaid clients, ODM and Ohio's elected officials.
We are extremely pleased that the ODM report validates that accusations made by some Ohio independent pharmacies are without merit, and are not supported by the report's data analysis performed by an independent third party.
Original source can be found here.