Ohio’s Single Pharmacy Benefits Management Program Yields $333M in Savings

In October 2022, the Ohio Department of Medicaid (ODM) launched the Single Pharmacy Benefit Manager (SPBM) program, replacing traditional pharmacy benefit managers (PBMs) with a centralized system managed by Gainwell Technologies. This reform aimed to increase transparency, reduce administrative overhead, and ensure fair reimbursement for pharmacies by allowing ODM to contract directly with them. The SPBM model unbundled services previously handled by PBMs, enabling ODM to oversee pharmacy benefits more effectively and align them with clinical and policy goals.

A new memo presented by ODM to the Joint Medicaid Oversight Committee presented findings from a recent actuarial assessment completed by Milliman, which was to conduct a cost effectiveness analysis regarding the SPBM program in its first two years of operation.

Over the first two years, the SPBM program resulted in significant cost savings and improved pharmacy reimbursement rates. Dispensing fees paid to pharmacies increased from an average of $0.73 to approximately $9 per prescription, a more than 1,200% increase. Despite higher payments to pharmacies, the state achieved total administrative cost savings of $333 million in the first 2 years of SPBM operation; and a net savings of $140 million, according to a study by Milliman, ODM's actuarial firm

The SPBM model also enhanced patient access to medications by expanding the pharmacy network to include nearly every pharmacy in Ohio. This expansion is particularly beneficial for Medicaid patients who may face transportation challenges, ensuring they can obtain necessary medications more conveniently. The program's success demonstrates that transparent, cost-based reimbursement models can simultaneously support pharmacies, improve patient access, and reduce costs for taxpayers.