(Washington, DC) — Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt released the following statement today on Florida Governor Rick Scott’s Medicaid savings proposal:

“Governor Scott is taking important steps to reduce wasteful spending in Medicaid, which is a big problem when it comes to pharmacy benefits. Because of its old-school ‘fee-for-service’ approach, Florida Medicaid pays drugstores much more than either Medicare or the commercial market pays them. Over the next decade, Florida could save $462 million – without cutting benefits, eligibility or payments to doctor and hospitals – simply by updating its approach to pharmacy benefits.”

Like most state Medicaid programs, Florida uses a fee-for-service approach in which state officials arbitrarily decide how much to pay Medicaid pharmacies. These officials are in turn targeted and heavily lobbied by independent drug stores to set payment levels that are artificially high. Most non-Medicaid drug benefits programs – like those offered by Medicare, employers and unions – use a different approach. They use private 3rd party pharmacy benefit experts — which are immune from political pressure – to negotiate more competitive rates with pharmacies and improve the use of generic drugs.

A new study finds that the Florida Medicaid program could save $462 million over the next decade by managing pharmacy benefits more like state employee plans, Medicare, Medicaid managed care plans, and commercial-sector employer plans. Voters would also prefer to reduce Medicaid spending by better managing pharmacy benefits rather than cutting benefits for patients or payments to doctors and hospitals, according to a new poll.

Read the report.