(Washington, DC)— Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt released the following statement today on a new lawsuit by several drugstore lobbying groups to prevent the California Medicaid program from reducing pharmacy payments:

“California could have sidestepped this litigation and reduced more than $2 billion in wasteful spending by following Governor Andrew Cuomo’s (D-NY) example and modernizing Medicaid pharmacy. Most Medicaid programs, including California, pay higher pharmacy fees than Medicare Part D and most other programs which pay drugstores based on market competition.

“In Medicaid, pharmacy rates are set by government officials who face intense, special interest pressure to keep rates artificially high. The results speak for themselves: in California, Medicaid pays drugstores $7.25 to fill a prescription while Medicare Part D and most private sector programs pay only about $2.00 for the same service. It’s time to modernize pharmacy benefits in California.”

Research: Modernize Medicaid Pharmacy to Save Billions, Preserve Access

California, like most state Medicaid programs, pays too much for prescription drugs because it uses an archaic fee-for-service (FFS) approach in which state officials set payment rates and are therefore constantly lobbied to inflate them by special interests, like the drugstore lobby. 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.

In the California Medicaid FFS program, just 64% of prescriptions dispensed were generics, significantly less than the average 80% generic dispensing rate typical of Medicaid managed care plans.

  • Polling finds voters would rather modernize Medicaid pharmacy than cut benefits for patients or payments to doctors and hospitals.
  • Research shows California consumers have broad access to pharmacy choices in urban, suburban, and rural areas, as an average of 24 pharmacies are located and compete near independent pharmacies throughout the United States. The independent drugstore lobby’s own economic report found that 400 new stores opened last year amidst what was a very profitable year for the industry despite the economic downturn.