Investor Presentaiton
developmental services, mental health, among others, but does not extend to Medicaid or state
employee insurers. One state that currently has a comprehensive purchasing program for all state
insurers and state-run facilities is California. In 2019, California's governor consolidated the drug
purchasing of all state-run programs including the California Public Employees' Retirement System,
Medicaid, and the California Corrections Department. The California Legislative Analyst's Office has
estimated that the state could save "hundreds of millions of dollars" per year and the Governor's office
estimates the savings at $150 million per year just for the state's coordinated care entities. Using the
examples of other states, the legislature should explore establishing a state prescription drug
purchasing program to leverage lives covered and save tax-payer dollars.
OHA's CCO contracting practices are not sufficient to ensure PBM
transparency and compliance
Moving to a single PBM or FFS structure will streamline OHA's monitoring efforts and increase
transparency and efficiency; however, there are improvements OHA can implement in the meantime to
address high-risk areas such as rebate pass-through and spread pricing.
OHA relies on CCOS for monitoring and verification of PBM compliance. PBMs are subcontractors of
CCOs, and OHA does not have direct visibility into their performance, however CCO contracts allow
OHA to review records and information from the CCOs and any of their subcontractors. While OHA
improved CCO contracts in 2020 by adding PBM-specific requirements, more needs to be done to
ensure high-risk areas are monitored and contract provisions are enforced.
OHA made some improvements, but comprehensive contract provisions are still
needed
Prior to 2020, OHA's contracts with CCOs had no PBM-specific requirements. Beginning in 2020, the
agency made significant improvements by adding certain terms to the CCO contracts. If a CCO chooses
to not use OPDP for pharmacy benefits, they must contractually require their chosen PBM to do the
following: 30
All contracts
Pass through all rebates and other monies PBMs receive from drug manufacturers;
Permit the CCO to perform an annual audit to ensure its PBM is compliant with
contractual requirements and is market competitive;
Cooperate with the CCO to obtain a market check which clearly identifies data
used to compare to the PBM's current performance;
Renegotiate the contract if the market check determines the PBM's performance is
1% behind the current market in cost savings;
Make an attestation of financial and organizational accountability and a
commitment to the principle of transparency; and
Provide full, clear, complete, and adequate disclosure to the CCO and OHA on the
services provided and all forms of income, compensation, and other payments
received or expects to receive under the subcontract with CCO.
30 This list is not all-inclusive. To see the full contract provisions, see OHA's website.
Oregon Secretary of State | Report 2023-25 | August 2023 | page 28View entire presentation