Report: Upgrading Medicaid Drug Benefits Could Save Pennsylvania $896 Million

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Pharmaceutical Care Management Association

May 28, 2013, 11:48 ET

WASHINGTON, May 28, 2013 /PRNewswire-USNewswire/ -- A new report estimates that upgrading management of drug benefits in Pennsylvania's Medicaid program could save $896 million without reducing access or the quality of benefits patients receive. The report shows that Pennsylvania and other state Medicaid programs could make more use of the tools Medicare, unions, and employers rely on to curb wasteful pharmacy spending.

Learn more about the study and Medicaid pharmacy at MedicaidPharmacySavings.com.

"The easiest way for Pennsylvania to reduce costs in Medicaid is to stop overpaying drugstores and start using cutting edge marketplace tools," said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt. "By upgrading Medicaid pharmacy management, Pennsylvania policymakers can protect patients without cutting benefits or slashing payments to doctors, hospitals, and other providers."

Components of potential savings for Pennsylvania include:

Increasing the use of generic drugs: In terms of formulary management, state-administered Medicaid programs are often less aggressive than other programs when it comes to promoting generics. In Pennsylvania, the average generic dispensing rate in the Medicaid fee-for-service (FFS) setting is 77%, compared to an average generic dispensing rate exceeding 80% in managed Medicaid settings.
Negotiating market-based pharmacy dispensing fees: At up to $4 per prescription, the average dispensing fee that the Pennsylvania Medicaid FFS program pays to retail pharmacies is significantly higher than average dispensing fees (approximately $2) paid by Medicare Part D plans, Medicaid managed care organizations (MCOs), and other health plans.
Using limited pharmacy networks: In most state Medicaid programs, every drugstore in the state is entitled to participate. State Medicaid programs could achieve greater savings by using a competitive process and negotiating better discounts from select drugstores that wish to participate in a limited pharmacy network.
Encouraging the use of more affordable, preferred brands: Through more active formulary management, the Pennsylvania Medicaid FFS program could promote greater use of more affordable, preferred brands.
Reducing drug diversion, polypharmacy, fraud, and waste: Medicaid plans that are more actively managed detect patterns of fraud through use of tools like step therapy, audits, and pharmacy lock-in programs to help detect and avoid inappropriate utilization.

PCMA represents the nation's pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 216 million Americans.

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SOURCE Pharmaceutical Care Management Association