Canton Rep. Thomas E. West is co-sponsor of proposal.

A House committee opened hearings Tuesday on a bipartisan bill designed to lower the cost of prescription drugs.

House Bill 479 — sponsored by Reps. Scott Lipps, R-Franklin, and Thomas E. West, D-Canton — takes aim at pharmacy benefit managers, known as PBMs, and other third-party administrators that operate as a middleman between insurance and drug companies.

"This bill will combat unnecessary price inflation and increase price transparency by requiring that patients are informed of the most affordable payment option for their prescriptions," Lipps told the House Government Accountability and Oversight Committee.

The hearing came a week after The Dispatch began reporting concerns of some pharmacists that CVS Caremark, a key player in the PBM industry, is charging the tax-funded Medicaid program excessive prices while paying pharmacies lowballed prices for the same drugs. Critics, including many independent pharmacists, say the practice is driving out the company's retail competition. CVS denies the accusations.

PBMs process drug claims, negotiate discounts with pharmaceutical companies and set rates paid to pharmacies to fill prescriptions. They profit by charging health plans more than they reimburse pharmacies and pocketing the difference, a practice known as spread pricing.

Lipps said the bill would limit the amount that a PBM or other administrator may charge a patient covered under a prescription benefit plan for a prescription drug to the amount an uninsured person would pay, or to the net reimbursement paid to the pharmacy for the drug, whichever is less.

"This represents a simple, common-sense solution that will increase price transparency for pharmacy patients like veterans and seniors for whom every dollar counts," Lipps said.

West also shared an example of inflated pricing for a medication to treat high blood pressure. The patient co-payment was $92.36; the pharmacy was paid $44.74, and the PBM received $47.62.

The actual cost of the drug was $72, meaning the patient could have saved more than $20 by paying out-of-pocket, while the pharmacy lost about $27, West said.

"Ohio’s small-business owners, like pharmacies, need to know that they can be a trusted resource for their customers and not be pushed fiscally underwater by corporate bully practices such as clawbacks. Drastic clawbacks, when combined with difficult economic conditions, can endanger the financial stability of independent pharmacies."

Legislators recently announced plans to introduce a second bill that would give the state auditor access to now-confidential information needed to audit CVS contracts with Ohio Medicaid managed-care companies.

Auditor Dave Yost said he has the authority to access information about the managed-care companies but not the PBMs they contract with. CVS is the PBM for four of Ohio's five Medicaid managed-care plans.