Auditor General Jack Wagner Says State Could Save Millions by Consolidating Prescription Drug Purchases

Merging purchases from 17 PA programs could save taxpayers at least $50 million a year

HARRISBURG, Pa., Nov. 17, 2010 /PRNewswire-USNewswire/ -- Offering another suggestion to address Pennsylvania's ongoing fiscal crisis, Auditor General Jack Wagner said today that the commonwealth could save millions of dollars annually by consolidating its prescription drug purchases.

Pennsylvania state government spends more than $2 billion a year on prescription drugs for nearly 2.1 million Pennsylvanians, through 17 drug programs overseen by nine different state agencies. The Department of Public Welfare is the largest purchaser, overseeing five contracts worth $2 billion a year as of 2003, the last public data available. The others are:

• Dept. of Aging, for Pharmaceutical Assistance Contract for the Elderly (PACE)
• Office of Administration, through the Pennsylvania Employment Benefit Trust Fund (PEBTF), for active and retired state employees
• Dept. of Labor and Industry, for workers' compensation
• Dept. of Military and Veterans' Affairs, for veterans' benefits
• Dept. of Health, for four programs, including chronic renal dialysis and cystic fibrosis
• Dept. of Corrections, for inmate drug benefits
• Dept. of Insurance, for Children's Health Insurance Program (CHIP)
• Pennsylvania State Police, for a new program for troopers, families, and retirees

Wagner said that the commonwealth could save at least $50 million a year just by consolidating all of its own prescription drug purchases.  Pennsylvania could save an additional $200 million a year, or more, if it took the next step of pooling its prescription purchases with those of New York and New Jersey.

Wagner said his proposal would change only how the drugs are purchased. It would not change the individual programs' terms of eligibility, the quality of medicines, or level of benefits provided to Pennsylvanians.

"I strongly urge the governor-elect and incoming General Assembly to form a blue-ribbon panel to analyze state government's wasteful and duplicative drug purchasing processes and make appropriate recommendations for maximizing efficiencies," Wagner said. "We must fix this system now so that it remains strong and vital for Pennsylvanians who need it now, and in the future."

Wagner made his remarks at a morning press conference, his most recent in a series of media briefings to discuss how Pennsylvania could save hundreds of millions of taxpayer dollars without reducing services to residents. Previous press conferences highlighted potential savings of $225 million in charter and cyber-charter school funding; $436 million by eliminating eligibility errors in the Medicaid program, and $201 million by offering state employees an early-retirement incentive.

"With Pennsylvania facing its greatest economic crisis since the Great Depression, and with the commonwealth facing a potential $5 billion budget deficit next year, we must do all that we can to save taxpayer money without compromising necessary services and programs," Wagner said.

Wagner noted that the idea of consolidating the state's prescription drug purchases has been around for two decades and was considered at one time or another by the Casey, Ridge and Rendell administrations.

Gov. Rendell established the Office of Health Care Reform in January 2003 to identify redundant and inefficient processes and procedures in state government.  The OHCR determined that the state's prescription drug purchases and reimbursements were areas with the most inefficient processes.

The OHCR assembled a cabinet to discuss how various state departments could work together to streamline prescription drug purchasing.  Based on meetings of the cabinet, the OHCR developed a program called the Commonwealth Pharmacy Policy and Administration Project, which recommended centralizing the state's drug purchases.

"Combining our prescription drug purchases should have been done years ago," Wagner said. "This is a smart way to save significant tax dollars without compromising the quality of services for recipients."

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly.  He is the commonwealth's elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations.  The Department of the Auditor General conducts more than 5,000 audits per year.  To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department's website at www.auditorgen.state.pa.us.

SOURCE Pennsylvania Department of the Auditor General

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