COLUMBUS — The Ohio Department of Medicaid has abruptly dropped long-planned changes to its prescription drug program projected to save taxpayers $42 million over two years.

Medicaid officials announced this month that they “delayed indefinitely” a plan unveiled two years ago by Gov. John Kasich to implement a single or unified preferred drug list — those medications covered without prior authorization — for all beneficiaries.

“The initiative to implement a unified [drug list] on Jan. 1, 2019, has been delayed indefinitely,” the Department of Medicaid wrote in a memo to all managed care plan providers.

The announcement was an about-face from Kasich’s last budget plan and an October 2018 memo from the Department of Medicaid’s reminding service providers that the change would take effect starting next year.

“We decided to concentrate our efforts on behavioral health and substance use disorder,” said Medicaid spokesman Tom Betti. He declined to provide any further explanation about the decision.

The state’s $25 billion Medicaid program provides health coverage to about 3 million poor and disabled Ohioans.

Most are enrolled in one of five managed care plans, each of which pays a pharmacy benefits manager to negotiate prices and rebates with drug companies, create preferred drug lists, and pay pharmacies to fill prescriptions for beneficiaries.

For those not enrolled in a managed care plan, like many nursing home residents, Medicaid’s fee-for-service program also has its own preferred drug list.

Under the governor’s plan, Medicaid fee-for-service and managed care plans would use the same preferred drug list and prior authorization policies.

“A single [preferred drug list] increases Medicaid’s bargaining power with manufacturers to seek higher supplemental rebates,” said Kasich’s 2018-2019 budget proposal, which also projected the $42 million savings.

Rebates help lower overall drug costs; however, deals negotiated by pharmacy benefit managers are kept secret, so that while state officials know how much rebate money is passed along to them, they have no idea how much is kept by the PBM.

“Rebate amounts are confidential, so the health plans do not know the state’s after-rebate cost for drugs and are not able to choose preferred drug lists that have the best net cost to the state,” according to the governor’s proposal.

In its October memo detailing the plan, Medicaid officials wrote: “The Ohio Department of Medicaid, in partnership with the Medicaid managed care plans (MCPs), is moving toward creating a unified preferred drug list ... beginning Jan. 1, 2019, all Ohio Medicaid MCPs will prefer the same medications and use the same prior authorization criteria for diabetes (insulin and non-insulin) hepatitis C drugs, and medication assisted treatment (MAT) for opioid disorder. ODM is using a phased-in approach to build a unified PDL, adding more categories to it later in 2019.”

Managed care plans and their PBMs have handled drug benefits for Medicaid since 2011.

The plans opposed the change.

“Ohio’s health plans were concerned about the cost impact to the Medicaid program and the impact on member care," said Miranda Motter, president and CEO of the Ohio Association of Health Plans.

Sen. David Burke, R-Marysville and chairman of the Joint Medicaid Oversight Commission, said it makes some sense to delay implementation.

“They ran the numbers and realized it might not have the impact they thought it would,” Burke said.

He also noted that starting Jan. 1, Ohio Medicaid will abandon its secretive prescription drug-pricing system and move to a transparent system that for the first time will disclose exactly how billions in taxpayer dollars are being spent.

The new system abolishes “spread pricing,” which has allowed PBMs to pocket millions by billing managed care companies more than they pay pharmacists to fill prescriptions and keeping the rest to cover their expenses plus a profit that a state consultant says is three to six times the industry standard.

Under the new "pass-through" model, PBMs will be paid an administrative fee and be forced to pay pharmacists the same as the PBM bills the state. It also for the first time will require PBMs to disclose all revenue they receive, including fees, rebates and other money from manufacturers.

“Why guess when you can know?” Burke said. “Starting Jan. 1, we will know actual costs."