July 6, 2011

Medicaid is a joint federal-state program that provides medical care to more than 60 million low-income individuals and families. Over the next few years, Medicaid enrollment is expected to swell and spending is set to explode.

There are several effective strategies that states can use to better manage and lower Medicaid drug costs, according to the Lewin Group and other researchers.

Five important ones are: (1) encouraging generic drug use when appropriate, (2) paying competitive market rates for drug dispensing, (3) coordinating and tracking drug therapies, (4) establishing reimbursement rates for drug makers similar to what commercial drug plans pay, and (5) empowering patients with control of some of the dollars spent on their drug therapies so that they become better consumers. The Lewin Group estimates that the state and federal governments could save $32.7 billion over 10 years by improving the efficiency of their Medicaid drug programs without detriment to enrollees’ health.

Read the policy backgrounder.