February 8, 2011
(Washington, DC) — Health and Human Services (HHS) Secretary Kathleen Sebelius should continue encouraging state Medicaid programs to explore more affordable pharmacy solutions despite opposition from the independent drugstore lobby, the Pharmaceutical Care Management Association (PCMA) said today.
“Medicaid can no longer afford to spend more on pharmacy benefits than Medicare and commercial payers. States should have the flexibility to use the tools other programs use to reduce costs,” said PCMA President and CEO Mark Merritt. “State Medicaid programs can no longer afford to pay pharmacies double or triple what other programs pay.”
Most state Medicaid programs use an old-school fee-for-service approach in which state officials arbitrarily decide how much Medicaid will pay pharmacies. This approach exposes state governments to political pressure from the independent drugstore lobby to set artificially high payment levels. Most non-Medicaid drug benefits programs – like those offered by Medicare, employers and unions – have rejected that approach and instead use independent, third party pharmacy benefit experts to negotiate with pharmacies. These programs also use cutting-edge, market-proven strategies to increase the use of generics.
According to a recent study, governors can cut billions in Medicaid – without cutting benefits to patients or payments to doctors and hospitals – by simply managing pharmacy benefits more like other, more successful programs. Recent polling finds voters prefer this option to cutting benefits for patients or payments to doctors and hospitals.
Research also shows consumers have broad access to pharmacy choices in urban, suburban, and rural areas, as an average of 21 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 a very profitable year for the industry.