Modernizing Medicaid Rx with ‘Innovative’ PBM Tools Will Help Kentucky Save $375 Million
Kentucky Medicaid Rx Pays More than Double the Pharmacy Fees that Medicare, Private Insurers Pay
(Washington, DC)— Governor Steve Beshear announced yesterday that most of Kentucky's Medicaid program would transition to managed care programs, saving the state $375 million. In modernizing the state's Medicaid pharmacy benefits, the Administration is relying on proven tools pioneered by pharmacy benefit managers (PBMs) to lower prescription drug costs, the Pharmaceutical Care Management Association (PCMA) said.
"Governor Beshear has done the right thing for taxpayers and for beneficiaries. Currently, the Medicaid fee-for-service program uses fewer generic drugs and pays drugstores more than double the pharmacy fees that Medicare or private insurers pay. Over the next decade, Kentucky could save $174 million – without cutting benefits or payments to doctors and hospitals – by modernizing the program's pharmacy benefits with the use of proven PBM tools," said Charles Coté, PCMA Assistant Vice President of Strategic Communications. "However, these savings could be lost if the independent drugstore lobby gets its way and guts many of the key pharmacy savings opportunities."
According to the state Department of Medicaid Services, Kentucky will now utilize "innovative programs in controlling pharmacy and medical costs" including:
• Implementing the use of cutting-edge e-prescribing technology;
• Increasing the use of more affordable generic medications; and
• Developing methods to achieve savings in pharmacy dispensing fees and drug acquisitions costs.
Kentucky Medicaid pays too much for pharmacy benefits because the program uses an archaic, fee-for-service approach in which state officials set payment rates and are therefore constantly lobbied to inflate them by special interests like pharmacists. To avoid this trap, most non-Medicaid drug benefits programs – like those offered by Medicare, employers and unions – rely upon independent, third party pharmacy benefit experts to negotiate competitive rates with pharmacies. These programs also reduce costs by employing cutting-edge, market-proven strategies to increase the use of generics.
Transitioning to a more efficient and affordable pharmacy benefit model would save states across the country billions without limiting access the National Center for Policy Analysis (NCPA) announced in a new white paper, "Increasing the Cost-Effectiveness of Medicaid Drug Programs."