(Washington, DC) — Governor Andrew Cuomo announced today that his 2011-2012 budget will include a proposal to modernize New York’s Medicaid program and manage its prescription drug benefits more like those in other, more affordable Medicare and private sector programs. The Department’s “Proposal to Redesign Medicaid” says this move would save state taxpayers $350 million though 2015.

“By administering Medicaid drug benefits like those in Medicare, New York will save millions without cutting benefits to those in need. Currently, the program uses fewer generic drugs and pays more than either Medicare or private insurers. It’s time to modernize New York’s Medicaid drug benefits and bring costs in line with other programs,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt.

According to a recent study, New York’s Medicaid program could save $2.3 billion over the next decade by managing pharmacy benefits more like Medicare, Medicaid managed care plans, and commercial-sector employer plans. Recent polling finds voters prefer this option to cutting benefits for patients or payments to doctors and hospitals.

Many state Medicaid programs pay too much for prescription drugs because they use an archaic, fee-for-service approach in which state officials set payment rates and are therefore constantly lobbied to inflate them by special interests. 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.