January 8, 2014


A new report by the Alabama Medicaid Pharmacy Study Commission shows pharmacy benefit managers (PBMs) can reduce costs in the state’s Medicaid program up to $35 million over a one-year period. The commission’s report also emphasized that PBMs can reduce wasteful spending while engaging a robust network of independent pharmacies and protecting patient access to prescription drugs.

“Alabama’s Medicaid program can dramatically reduce costs by simply applying best practices already used by Medicare and other large payers that offer pharmacy benefits,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt. “Fortunately, this can be done in a way that protects patient benefits and avoids cutting payments to hospitals and doctors.”

The commission was established by Governor Robert Bentley in June 2013 to review ways to reduce wasteful spending in Medicaid and its findings are in line with other research that finds modernizing state Medicaid programs will lead to significant savings. Of the three proposals submitted to the commission, the PBM option is estimated to save the most overall ($13 million to as much as $35 million over a one-year period).

Another report estimates that upgrading management of drug benefits in Alabama’s Medicaid program could save $513 million over the next decade without reducing access or the quality of benefits patients receive. The study projects how much Alabama’s Medicaid program could save by avoiding drugstore overpayments and using pharmacies that offer better rates.

The National Center for Policy Analysis (NCPA) also recently issued a report on Alabama’s Medicaid program that shows the state could utilize various PBM tools to lower costs. NCPA is a nonprofit, nonpartisan public policy research organization that develops private, free-market alternatives to government regulation that rely on the strength of the competitive, entrepreneurial private sector.