COLUMBUS — Ohio Medicaid officials are cracking down on another lucrative tactic pharmacy middlemen use to boost profits — from expensive specialty drugs.

Medicaid Director Maureen Corcoran told state lawmakers Tuesday that pharmacy benefit managers — which decide which medications are defined as "specialty drugs" — cannot require they be filled only by a "specialty pharmacy."

Such specialty pharmacies are often affiliated with the PBM, meaning they are essentially steering business for some of the most expensive drugs to themselves.

"We have identified problems with specialty pharmacies so we are working on some final language specific to specialty pharmacies that will open up that dark area, require that there be competition, as well as language about affording pharmacies and consumers' choice and not limiting it to a single relationship," Corcoran said in testimony before the House Finance Committee.

The new requirement, starting July 1 along with several others, aims to protect tax dollars in the $26 billion program providing health insurance to nearly 3 million poor and disabled Ohioans.

The Department of Medicaid contracts with five managed care companies to administer the program. The plans subcontract with PBMs to oversee drug coverage. For instance, the parent company of CVS Caremark, PBM for four of the plans, operates both retail and mail-order pharmacies.

"When PBMs have ownership interests in pharmacies, there are obvious conflicts of interest. What we have seen with specialty drugs — especially ones that get steered to PBM-affiliated pharmacies — is that those conflicts appear to be manifesting themselves into massive cash grabs. If this isn’t self-dealing, then I don’t know what is," said Antonio Ciaccia, of the Ohio Pharmacists Association.

The report by Dr. Adam J. Fein, CEO of a pharmaceutical economics consultant, found that "the top four companies — all of which are owned by a PBM — accounted for more than 70 percent of prescription revenues from pharmacy-dispensed specialty drugs."

Frustrated by the costly and secretive practices of PBMs, Ohio Gov. Mike DeWine recently ordered Medicaid officials to rebid managed care contracts.

Corcoran told lawmakers Tuesday that Medicaid is making additional changes July 1 to shine more light on drug pricing as the agency moves forward with rebidding overall managed care contracts.

In addition to specialty pharmacy provisions, Corcoran said state officials are requiring managed care subcontractors, like PBMs, to comply with all requirements imposed on the plans.

Medicaid also must have "access to all information related to payment streams associated with PBMs," and managed care plans must give the state advance notification of any changes to their agreements with PBMs.

"We’ve tried to look at every area of the problem and tighten up the screws to make sure that there is more transparency, that data is available, that at least for certain proprietary information the department can get it, and that more information can be publicly available," Corcoran said.