Investor Presentaiton

Medicaid prescription benefit models Multiple PBMs Currently, Oregon's Medicaid program uses a multiple PBM model. All 16 CCOS have the choice to contract with the Oregon Prescription Drug Program to administer pharmacy benefits, or the CCOs can choose to contract with their own PBM.7 In this model, CCOS pay their PBMs from capitation payments received from the OHA (Oregon Health Authority). PBMs are typically responsible for paying and processing pharmacy claims, developing or supporting the CCO's formulary, negotiating with network pharmacies for lower price guarantees, and contracting with drug manufacturers for drug rebates. Pros Easier for CCOs to coordinate care across pharmacy and medical benefits Outsources processing and payment of pharmacy claims Cons Limited monitoring and knowledge of PBM activities by OHA Drug rebates, which can lead to lower costs, are not maximized Health equity concerns for members who do not have consistent access Does not leverage purchasing power and economies of scale Reverse auction A PBM reverse auction is an online, competitive bidding process states can use to select a PBM to manage prescription drug benefits. An auction starts off with an opening price and PBMS submit lower counteroffers during multiple rounds. States achieve savings by forcing PBMs to offer the same contract terms but at a lower price than in preliminary rounds of bidding. Reverse auctions have been known to generate significant savings in various governmental procurements. New Jersey uses reverse auctions to select PBMs for public employee health plans and estimates the state will save $2.5 billion in drug spending between 2017 and 2022. While reverse auctions can lower costs for states, bid costs should not be the only factor to consider. There is a risk PBMs might push cost savings to the pharmacy level, which could result in low or unfair pharmacy reimbursements and ultimately exacerbate pharmacy access issues. Examples: New Jersey and Maryland. Pros Potential cost savings • Leverages free market competition • Ability to define contract requirements bidders must meet Fee-for-Service (FFS) Cons Less flexible and additional costs may be incurred with change orders Provider uncertainty between contract terms In an FFS model, prescription drug benefits would be administered by OHA. Pharmacy claims would be processed by the contracted pharmacy benefit administrator, who currently performs those duties for FFS claims. In this model, a uniform formulary would be more efficient to implement, prescribers would benefit from uniformity, and pharmacies would have more consistent reimbursements. West Virginia 7 As of 2022, only one CCO has chosen to use the Oregon Prescription Drug Program to administer pharmacy benefits. Oregon Secretary of State | September 2022 | page 4

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