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Sixth state settles with Medicaid contractor

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[ MM Curator Summary]: Centene will pay NH $21M for spread pricing allegations.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



New Hampshire became the sixth state to announce a settlement with a Medicaid managed-care company that Ohio first accused of ripping off taxpayers.

In a statement last week, New Hampshire Attorney General John M. Formella said that St. Louis-based Centene had agreed to pay the state $21.1 million to settle state claims that Centene overbilled the state’s Medicaid department by $2.4 million for prescription drugs between the beginning of 2016 and the end of 2021.

The funds will come from $1.3 billion Centene set aside for such disputes last year. Mississippi, Kansas, Arkansas and Illinois already have announced settlements totaling $154 million with the company.

As it has in agreements with other states, Centene admitted to no wrongdoing in its settlement with New Hampshire.

Ohio Attorney General Dave Yost in March sued the managed-care giant, accusing it of overbilling that state’s Medicaid program by tens of millions. Centene  swiftly settled in June, agreeing to pay Ohio more than $88 million and setting aside funds to pay 21 other states, which haven’t filed lawsuits in the matter.

Centene is the largest Medicaid managed-care company in the United States. In that capacity, it creates networks of patients and providers such as doctors and hospitals on behalf of the state. It also hired or used its own subsidiaries known as pharmacy benefit managers to facilitate drug transactions.

Disputes over the company’s conduct go back to 2018, when The Columbus Dispatch reported that pharmacy benefit managers owned by Centene and CVS appeared to be claiming they did duplicate work in 2017 for $20 million. Both companies denied that they were double-dipping at taxpayer expense.

New Hampshire began its probe after learning of the action in Ohio.

“The Department of Health and Human Services (“DHHS”) and the Department of Justice (“DOJ”) began a review of Centene’s provision of pharmacy benefit services after similar investigations in other states became public,” Formella’s statement said. “The review focused on concerns regarding Centene’s practices related to the reporting of pharmacy benefit services costs in the Medicaid program, including the pricing of prescription drugs.”

The investigation “concluded that Centene’s inaccurate reporting of pharmacy benefit services costs, and the State’s use of that data received from Centene, resulted in at least a $2.4 million negative financial impact to the State during the settlement period,” the statement said. “In lieu of further review, investigation, and potential litigation, Centene and the State of New Hampshire have agreed to settle this matter in exchange for payment in the amount referenced above and the implementation and continuation of business practices that provide full transparency related to pharmacy benefit claims.”

Ohio authorities caused controversy in August when — just two months after the settlement was announced — the Ohio Department of Medicaid said that it would give Centene a multi-billion-dollar managed-care contract as part of the largest public procurement in Ohio history. Allegations of past misconduct were not counted against the company in a competitive procurement process.

Centene has said that the moves aren’t related to the settlements, but in the wake of the Ohio suit the company has said it’s getting out of the pharmacy-middleman business altogether and Michael Neidorff, its CEO who made $59 million in 2020, announced his retirement.

This story was republished from the Ohio Capital Journal under a Creative Commons license.

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Biogen Shares Fall Premarket on Medicaid Coverage Plans for Aduhelm

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[ MM Curator Summary]: Hopes are fading for Aduhelm backers.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



Shares of Biogen Inc. fell nearly 10% in premarket trading Wednesday after Medicare officials indicated they plan to limit coverage of the company’s Alzheimer’s disease drug Aduhelm, prompting several Wall Street analysts to cut their views on the company.

The Centers for Medicare and Medicaid said in a proposed policy that they would cover Aduhelm on the condition that patients are in clinical trials and have early-stage symptoms.


Analysts at Stifel called the proposal, which is subject to a final decision due in April, a “big blow” to Aduhelm that means the drug won’t be a meaningful revenue driver for the foreseeable future.

Mizuho analysts, who have a neutral rating on Biogen shares, cut their price target on the stock to $207 from $270 after removing nearly all Aduhelm sales from their model. Analysts at Piper Sandler downgraded Biogen shares to neutral from overweight and reduced their price target to $216 from $362, while analysts at Needham cut their target to $292 from $328.

Biogen shares rose as high as $468.55 on June 7 after the U.S. Food and Drug Administration’s approval of Aduhelm, the first new Alzheimer’s drug in nearly two decades, but the stock fell back amid pricing issues with the drug and ended last year at $239.32, below its 2020 closing price of $244.86.

In premarket trading Wednesday, Biogen shares were down 9.3% to $219.23.

Write to Colin Kellaher at


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Clinics Say California’s New Medicaid Drug Program Will Force Them to Cut Services

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[ MM Curator Summary]: A judge has denied CA clinics’ request to keep drug prices high so they can make more 340B profits.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



An East Palo Alto resident is inoculated during a COVID-19 vaccination clinic run by Ravenswood Family Health Network at Facebook headquarters in Menlo Park on April 10, 2021. Ravenswood clinics serve low-income populations with more than half of their patients participating in Medi-Cal and other public health care programs. (Anne Wernikoff/CalMatters)

SACRAMENTO, Calif. — California’s sweeping new program to buy prescription drugs for its nearly 14 million Medicaid patients has alarmed health clinics that say they will lose money and have to cut services.

Gov. Gavin Newsom acknowledged Monday that some clinics, which serve the poorest Californians, would lose funding, and he included $105 million for them in the 2022-23 proposed state budget he unveiled in the state capital.

But the allocation falls far short of what clinic officials say they need to keep critical health care services funded in some of California’s neediest areas. California’s federally qualified health centers, which operate more than 1,000 clinics across the state, have filed a lawsuit in federal court to exempt them from the program, but a judge on Monday denied their request for a temporary reprieve while the lawsuit proceeds.

“People are going to be laid off; services are going to be cut,” said Anthony White, president of the Community Health Center Alliance for Patient Access, a statewide organization of federally qualified health centers. “It’s going to decrease access for our patients.”

The drug program, known as Medi-Cal Rx, debuted Jan. 1 and is one of Newsom’s key health care initiatives. It takes the responsibility for prescription drug coverage in the state’s Medicaid program away from managed-care plans and puts it into the hands of a state contractor.

On his first day in office in 2019, Newsom promised the overhaul would deliver better health care for patients and generate “substantial annual savings” because the state would negotiate lower prices as one of the largest drug purchasers in the country.

The Newsom administration anticipates the state will save $414 million in the 2022-23 budget year and nearly two times that amount in the next one, said Keely Martin Bosler, director of the California Department of Finance.

California’s health clinics, however, could lose up to $200 million a year in drug reimbursements, White estimated, money they have been using to care for patients with asthma, HIV and other chronic health problems. The reimbursement money is a key revenue stream for clinics, but they rely primarily on federal grants for their funding, in addition to some patient revenue and private donations.

At issue is money the clinics have received through a federal prescription drug savings program known as “340B.” The 340B program requires drug manufacturers participating in Medicaid to offer deep discounts to certain providers that care for underserved and uninsured people, including health clinics. The health centers, in turn, must use that money to expand health care services.

Beginning Jan. 1, California started buying prescription drugs for all its low-income and disabled residents enrolled in Medi-Cal, the country’s largest Medicaid program. Because the state expects to get bigger discounts on drugs than the roughly two dozen Medi-Cal managed-care insurance plans did, clinics expect to receive less 340B money.

The $105 million Newsom earmarked for health clinics in his budget proposal to offset their losses was not intended to fully replace them, said Michelle Baass, director of the state Department of Health Care Services, which administers Medi-Cal, in the state’s Jan. 5 response to the clinics’ lawsuit.

“Plaintiffs have no entitlement to continued profits from selling marked up 340B drugs,” she wrote.

The funding Newsom proposed is not guaranteed. Indeed, it is now subject to the annual budget negotiation process. The legislature has until June 15 to negotiate with Newsom and adopt a deal. The 2022-23 state budget takes effect July 1.

Mark Ghaly, secretary of the state’s Health and Human Services Agency, said the administration has been working with clinics and is open to further discussions.

“We’re always happy to sit down and try to understand what the conditions are today,” Ghaly said.

California Healthline’s Angela Hart contributed to this report.

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.


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AR/Rx- State officials announce Arkansas Medicaid pharmacy benefits expansion

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[ MM Curator Summary]: The state has removed restrictions on several types of medications.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

LITTLE ROCK, Ark. – Arkansas Medicaid clients now have additional pharmacy benefits, including three more prescriptions each month.

According to officials with the Arkansas Department of Health, Arkansas Medicaid previously paid for three prescriptions per month for adult clients. Now, the program will pay for three more prescriptions, allowing adult Medicaid clients up to six paid prescriptions.

Expansion of Arkansas Medicaid system announced

Multiple classes of routine medication will no longer count toward that limit, the ADH added. According to Arkansas Medicaid, these medication types are:

•    High blood pressure
•    High cholesterol
•    Bleeding disorders
•    Diabetes
•    Inhalers for breathing disorders
•    Birth control pills
•    Contraceptives
•    Medications used to treat opioid disorder
•    Medications that help you stop smoking

The additional pharmacy benefits are only available to adults aged 21 and older who are in the fee-for-service Medicaid program, officials said.

For more information, call the Arkansas Department of Human Services Pharmacy Department at 501-683-4120 or visit the ADH website.

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Oregon wants to get out of covering drugs like Aduhelm in Medicaid



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[ MM Curator Summary]: Oregon is hoping to be subject to extreme drug costs.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


WASHINGTON — Oregon is gearing up to ask the Biden administration if its Medicaid program can avoid paying for drugs approved through a fast-track approval pathway — like Biogen’s pricey, controversial new Alzheimer’s drug, Aduhelm.

Oregon announced this month it is planning to formally submit a request to the administration to let its state out of a law that requires Medicaid programs to cover nearly all Food and Drug Administration-approved drugs.


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Long Predicted Medicaid Specialty Drug Trend Finally Surpasses 50% of Pharmacy Spend in the Latest Magellan Rx Management Medicaid Pharmacy Trend Report

[ MM Curator Summary] New analysis of Medicaid rx spending shows similar trends as previous years, with specialty drugs accounting for more than half of all drug spending.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



Magellan Rx Management, the full-service pharmacy benefits management division of Magellan Health, Inc. (NASDAQ: MGLN), released its sixth annual Medicaid Pharmacy Trend Report TM, the industry’s leading report exclusively detailing trends in the Medicaid pharmacy fee-for-service (FFS) space.

The Medicaid Pharmacy Trend Report highlights the evolving landscape of Medicaid, made even more dynamic from the events of the last two years. The report includes an in-depth analysis of class and drug trends, forecasting of Medicaid key conditions, drugs in the pipeline, and Medicaid pharmacy economics. This is also the only detailed industry source for the analysis of Medicaid pharmacy fee-for-service (FFS) gross, net, and forecasted drug cost trends.

“As our nation continues to navigate the lasting impacts of the COVID-19 pandemic, there is no doubt that states are facing unprecedented challenges across all areas of government, especially related to ensuring the mental and physical well-being of their citizens,” said Meredith Delk, PhD, MSW, general manager and senior vice president, government markets, Magellan Rx Management. “The Medicaid Trend Report illustrates critical data-driven observations and solutions. The valuable insights in this report can assist states on their mission to ensure a high quality and cost-effective prescription drug program for their most vulnerable populations.”

Key findings in this year’s report include:

  • In 2020, specialty drugs accounted for 51.4% of the net cost in Medicaid, a trend predicted for the last five years. A constant imbalance in spend, specialty drugs only accounted for 1.3% of utilization.
  • 2020 traditional net cost trend for Medicaid FFS was positive for the first time in five years with the introduction of new-to-market drugs.
  • Medicaid FFS top drug classes remained almost identical to previous years – with HIV/AIDS and antipsychotics accounting for more than 19.8% of the total net drug spend.
  • With a steady increase in pipeline drugs, most key conditions will experience increased trend over the next three years. Comparatively, conditions with generic drug introductions or specialized management strategies will see a decrease.

Many of the Medicaid FFS drug trends remained steady, but the drug pipeline, a concern for all lines of business and operating in a year unlike any other, forced states to consider alternative pathways to continuity of care for patients, largely focused on technology-based solutions.

“Our ability to offer comprehensive and configurable solutions that fundamentally connect the dots for our customers and their members around the efficacy of drugs, quality care and payments is key,” said Delk.

The Magellan Rx Management Medicaid Pharmacy Trend Report includes data from Magellan Rx’s Medicaid FFS pharmacy programs in 25 states and the District of Columbia. The material is reviewed and supported by a team of Magellan Rx experts with broad national expertise, including 369 years of combined pharmacy benefit administration (PBA) experience.

About Magellan Rx Management: Magellan Rx Management, a division of Magellan Health, Inc., is shaping the future of pharmacy. As a next-generation pharmacy organization, we deliver meaningful solutions to the people we serve. As pioneers in specialty drug management, industry leaders in Medicaid pharmacy programs and disruptors in pharmacy benefit management, we partner with our customers and members to deliver a best-in-class healthcare experience.

About Magellan Health:Magellan Health, Inc., is a leader in managing the fastest growing, most complex areas of health, including special populations, complete pharmacy benefits and other specialty areas of healthcare. Magellan supports innovative ways of accessing better health through technology, while remaining focused on the critical personal relationships that are necessary to achieve a healthy, vibrant life. Magellan’s customers include health plans and other managed care organizations, employers, labor unions, various military and governmental agencies and third-party administrators. For more information, visit


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CONTACT: Media:Lilly Ackley,, (860) 507-1923

Investor: Darren Lehrich,, (860) 507-1814



SOURCE: Magellan Health, Inc.

Copyright Business Wire 2021.

PUB: 11/15/2021 06:30 AM/DISC: 11/15/2021 06:30 AM


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After Ohio scandal, Medicaid managed-care giant to exit the pharmacy business

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Centene will outsource PBM services moving forward.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



Centene Michael Neidorff, Chairman and CEO. Despite recent scandals involving the company, Neidorff says profits are the top priority. (DoD Photo by U.S. Army Sgt. James K. McCann, Wikimedia commons).

Centene, the nation’s largest Medicaid managed-care company, is planning to stop its work as a pharmacy middleman, or pharmacy benefit manager. Executives last week said the company is issuing a $30 billion request for proposals from an outside contractor to take over the work.

The news comes after Ohio Attorney General Dave Yost sued the company in March, accusing it of working through its Ohio managed-care organization to layer pharmacy middlemen atop one another and then overbilling taxpayers by tens of millions of dollars. Centene didn’t admit wrongdoing, but it agreed to pay Ohio $88 million and it set aside $1 billion to settle with states that seemed likely to follow Yost’s lead and sue the company. 

Centene didn’t respond to a request for comment, but in a call with investors last week, the company’s top executives said that managing its pharmacy benefits wasn’t among its core functions.

“We are launching an RFP in 2022 that will be awarded in 2023,” said Sarah London, Centene’s president of health care enterprises. “The goal there is to make sure that we are staying sharp in terms of our external partners, getting the greatest economic benefit where we are leveraging an external partner.”

The news organization Axios last week reported that the move into pharmacy benefits by Centene, a Fortune 24 company, was a bust. But any strategic failures or Ohio’s lawsuit accusing the company of fraud weren’t mentioned by the Centene executives or investment analysts on last week’s call.

Pharmacy benefit managers, or PBMs, perform multiple functions in the supply chain. They never touch a pill, but they negotiate discounts from manufacturers in exchange for giving their products preferred treatment and they create networks of pharmacies. And PBMs determine how much to pay pharmacies for the drugs they dispense.

Centene subsidiary Buckeye Community Health Plan fits more closely with the corporation’s core business. As a managed-care contractor with the Ohio Department of Medicaid, it signs up patients, creates networks of providers such as doctors, and it reconciles claims so providers are paid.

The company’s conduct in 2017 raised questions about how squarely the Buckeye was treating Ohio taxpayers.

Amid a newspaper investigation of pharmacy benefit managers, the Medicaid department in 2018 commissioned an analysis of all drug transactions under the department’s managed-care program for the previous year. The analysis found that CVS Caremark and OptumRx — the PBMs serving all five of Ohio’s managed-care providers — had marked up prescription drugs by $224 million in a single year.

The analysis turned up something else. In addition to hiring CVS Caremark, Centene’s Buckeye also paid the Centene-owned PBM Envolve Health $20 million to handle pharmacy benefits.

When CVS was asked whether it provided the services that the Medicaid department said were provided by Envolve, CVS said it did, leaving the impression that taxpayers were being double-billed. But both companies later said they weren’t double-dipping — they were providing different services that fit under common categories.

Yost apparently didn’t buy it, suing Centene over conduct that stretched as far back as 2016 and claiming conduct such as pocketing dispensing fees intended for pharmacies.

It’s unclear how chastened Centene’s leadership was after announcing possible settlements with as many as 22 state Medicaid programs. Just after, CEO Michael Neidorff stressed to investors that the company hadn’t admitted wrongdoing and that his No.1 and No. 2 goals were making more profit in the future.

Perhaps there’s no reason to be sorry. Despite the conduct in Ohio by Buckeye, Envolve, CVS Caremark and OptumRx, the Medicaid department this year awarded all three of their parent corporations huge contracts for part of more than $22 billion in business — the largest public procurement in state history. 

In Centene’s investor call last week, Chief Financial Officer Drew Asher said that bidding out its pharmacy management business is another money-making opportunity.

“We’ve got well over $30 billion in pharmacy spread across our products and obviously this has grown as the business grows,” he said. “It’s certainly one of our value-creation opportunities.”


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New Alzheimer’s drug could balloon state Medicaid budgets

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Medicaid may be left with all the cost of the new drug if Medicare does not cover it.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



New Alzheimer’s drug could balloon state Medicaid budgets – STAT


A decision by Medicare not to cover Aduhelm would cost the Medicaid program an estimated $1.9 billion more in fiscal year 2022.



A new drug that was supposed to be a lifeline for thousands of individuals and families struggling with the tragic impacts of Alzheimer’s disease is evolving into a millstone around the neck of Medicaid, America’s largest safety net health insurer.

The Medicaid program, which today connects one in every four Americans to the health care they need, is an essential part of the U.S.’s health care fabric. But a recent decision by the Food and Drug Administration to approve Aduhelm, an unproven and exceptionally costly new drug to treat the symptoms of early Alzheimer’s disease, could threaten Medicaid’s ability to continue to serve the millions of people who rely on the program.

Medicaid operates independently in each of the nation’s 56 states and territories. It is a “first responder” during economic downturns and for natural disasters and pandemics. It is the largest provider of mental health and behavioral health services. Forty percent of all children rely on Medicaid for comprehensive health care benefits, and the program finances 50% of all births in the U.S.

Medicaid now overshadows its sister program, Medicare, in terms of total number of people covered. Medicaid also supports the Medicare program for low-income seniors and individuals with disabilities by paying for its sizable premiums, co-pays and deductibles. It also pays for comprehensive nursing home care and home and community-based options for seniors with low incomes.

There’s no question that curing or treating Alzheimer’s, or at the very least delaying its onset, is a priority for all sectors of the health care landscape, as 5 million Americans and their families are currently living with the disease. But the most recent development in this sphere could burden state Medicaid programs with an expensive product with questionable evidence of effectiveness.

The FDA’s approval of Aduhelm, a drug meant to slow the progression of the disease, has been touted as a potential cost saver for the Medicaid program by reducing the number of seniors with dementia who will need long term care. It’s likely to do just the opposite.

The Medicare program has just embarked on a comprehensive review of Aduhelm, which may lead to the federal program deciding to cover it for a narrow set of individuals, or not cover it at all. This may well be the smart decision for a product with a $56,000 price tag and questionable evidence of success. The Institute for Clinical and Economic Review believes a price between $3,000 and $8,400 is more appropriate.

A decision by Medicare not to cover Aduhelm will shift all of the costs entirely to the Medicaid program, which is required by federal law to cover all FDA-approved drugs, no matter how poorly they work. Based on a survey conducted on behalf of the National Association of Medicaid Directors, which I direct, Medicare’s decision not to cover Aduhelm would cost the Medicaid program an estimated additional $1.9 billion in fiscal year 2022.

State Medicaid programs can ill afford to waste valuable resources — particularly in the midst of a pandemic — on high-cost, low-value treatments. Compounding this budget reality is the fact that Aduhelm is not intended to cure Alzheimer’s, so in all likelihood individuals who are prescribed it will take it for the rest of their lives, compounding the long-term costs of covering it.

The federal government must take immediate action to ensure that these costs are not irresponsibly shifted onto the Medicaid program. One straightforward reform might be to allow state Medicaid programs the authority to cover — or not cover — Aduhelm in alignment with Medicare’s decision.

Aduhelm is just the most recent example of the challenges Medicaid faces in sustaining its ability to provide high-value and cost-effective care for the tens of millions of Americans who rely on it. There are further reforms that will still need to be made as future products like Aduhelm that carry both astronomical price tags and little evidence of their clinical effectiveness receive FDA approval. Medicaid must have a more sensible, longer-term solution to how it covers and pays for those products.

Matt Salo is the executive director of the National Association of Medicaid Directors.




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Centene reaches $72M settlement with Illinois, Arkansas for alleged Medicaid overcharges

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2 more states have been paid out from the $1.1B settlement fund Centene set aside to deal with PBM scandal issues.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


Samantha Liss for Healthcare Dive

UPDATE: Oct. 1, 2021: Centene said in a statement: “We respect the deep and critically important relationships we have with our state partners. These no-fault agreements reflect the significance we place on addressing their concerns and our ongoing commitment to making the delivery of healthcare local, simple and transparent.”

Dive Brief:

  • Attorneys general for Arkansas and Illinois announced Thursday they both reached multi-million dollar settlements with Centene after the insurer allegedly overcharged their respective state Medicaid programs for prescriptions.
  • The alleged overages occurred after Centene subsidiary Envolve Pharmacy Solutions failed to disclose relevant discounts, Arkansas Attorney General Leslie Rutledge claims. Centene also improperly inflated dispensing fees, Illinois Attorney General Kwame Raoul alleged.
  • Centene will pay Illinois a total of $56.7 million in two installments over the next 12 months and $15.2 million to Arkansas in a similar arrangement.

Dive Insight:

The latest settlements come just months after Centene reached similar agreements in Ohio and Mississippi, in which the St. Louis-based insurer agreed to pay a total of $143 million to resolve allegations of overcharging the two states for medications.

The state of Ohio dropped its lawsuit against Centene as a result of the settlement. The payer did not admit fault in the settlements, but at the time the company set aside $1.1 billion to resolve future disputes in other states, according to a previous filing with the U.S. Securities and Exchange Commission.

In a series of tweets on Thursday, Rutledge explained that Centene’s Envolve was tasked with managing the state’s prescription drug program and was contracted to reimburse pharmacies, create preferred drugs lists and negotiate rebates with other pharmaceutical companies.

“When Envolve charged Arkansas Medicaid for the drugs, contracts required the costs to be capped by certain industry-standard prices, however Envolve charged Arkansas Medicaid more than the allowed price cap,” Rutledge tweeted.

Centene did not immediately respond to a request for comment.

Pharmacy benefit managers have come under fire in recent years for the opaque ways in which they operate and their role in rising drug costs. PBMs’ less-than-transparent business model has previously garnered scrutiny from lawmakers interested in tackling drug pricing reform.



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Medicaid Subscription-Based Payment Models Show Mixed Results

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LA and WA had very different results in uptake and outcomes, and it may be because of pent up demand differences.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


Louisiana and Washington both implemented subscription-based payment models, but the states saw disparate results.


Source: Getty Images


By Kelsey Waddill

September 06, 2021 – Using a subscription-based payment model to cover medication costs could have varying impacts on access to medication depending on the state that implemented the model, according to a study published in JAMA Health Forum.

Researchers analyzed the uptake of an antiviral hepatitis C virus drug in two states after each state implemented a form of subscription-based payment model. 

Louisiana received CMS approval for its hepatitis C subscription-based payment model in 2019. The state’s model established a supplemental rebate agreement with Asegua Therapeutics for the drug. Based on the agreement, Louisiana has an unlimited right to use the drug, Epclusa, with a capped cost that the state pays over time.

On top of covering hepatitis C medications for the patient population within the justice system, the model also screened and treated prisoners and covered continued care after release. The goal was to treat 31,000 prisoners with hepatitis C or more by December 2024, specifically the model aimed to treat 10,000 in the first year of its implementation.

CMS approved Washington state’s subscription-based payment model less than a month before greenlighting Louisiana’s model. Like Louisiana’s, Washington’s plan for lowering drug spending for hepatitis C was to enter into a value-based contract that allowed the state to use limitless quantities of the drug at a fixed rate.

Washington’s model aimed to create and cure 4,900 individuals between its implementation date in June 2019 and June 2020.

The JAMA article’s researchers used data pulled from the states’ Medicaid State Drug Utilization Data files. They analyzed data from January 2017 through June 2020, with the post-implementation observation period lasting from July 2019 through June 2020. 

The researchers also used data from the Centers for Disease Control and Prevention’s (CDC’s) National Notifiable Diseases Surveillance System to know the incidence of acute and chronic hepatitis C in the relevant regions.

In Louisiana, the rate of acute hepatitis C viral infections stayed stable but the rate of chronic hepatitis C viral infections grew pre-implementation and then declined in 2019 when the state implemented its subscription-based payment model.

The state saw an increase in prescription fills per after the implementation, with quarterly fills rising from 43.1 prescriptions filled per 100,000 Medicaid enrollees to 206.0 prescriptions filled per 100,000 enrollees.

Meanwhile, in Washington quarterly prescription fills rose only slightly, increasing from 50.1 fills per 100,000 Medicaid enrollees before implementing the subscription-based payment model to 53.9 fills per 100,000 enrollees after implementation.

Why did Louisiana and Washington state have such different outcomes with subscription-based payment models, despite having very similar methods?

One key difference between the two states’ scenarios was that before Louisiana implemented the subscription-based payment model, it had a restriction on who could receive coverage for hepatitis C medications based on liver damage and sobriety. Washington had no such limitations before or after implementing its model.

“The heterogenous response of these 2 states to implementation of a SBPM may be partially attributable to historical access to direct-acting antiviral HCV medications, differences in SBPM implementation, and the onset of the COVID-19 pandemic,” the researchers explained.

However, on the last point, the researchers noted that excluding the second quarter of 2020 to mitigate the potential influence of the coronavirus pandemic did not change the results.

Furthermore, the researchers used a synthetic control model to eliminate those differences and found that Louisiana still had a 180 percent relative increase in prescription fills.

“Nonetheless, the disparate influence of SBPMs in Louisiana and Washington suggests that states with greater pent-up demand for HCV medications may expect to see larger gains in use from a SBPM,” the study added.

Alternative reasons for the different results could include one state having a superior screening and treatment process or simply a process that was less susceptible to the influence of the coronavirus pandemic.

Still, the researchers concluded that subscription-based payment models have potential to expand access to expensive prescription drugs.

As public and private payers combat rising prescription drug prices, they have implemented various innovative payment models to manage this area of healthcare spending. Apart from subscription-based payment models, some Medicaid programs have implemented outcomes-based payment models and population-based payment models.


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