March 7, 2011
(Washington, DC) — To help reduce state Medicaid spending, the Texas Health and Human Services Commission (HHSC), the agency in charge of the state’s Medicaid program, has proposed that the program’s prescription drug benefits be operated more like those in the private sector that are more affordable and efficient. According to the HHSC, this change would save state taxpayers $82 million. Governors Chris Christie (R-NJ) and Andrew Cuomo (D-NY) have already proposed such changes to reduce prescription drug spending in their own states.
“Texas shouldn’t pay more for Medicaid drug benefits than private insurers and Medicare,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt. “Currently, the program uses fewer generic drugs and pays drugstores more than triple the fees that Medicare or private insurers pay. By modernizing Medicaid drug benefits, Texas will save millions without cutting benefits to those in need.”
The savings projection for Texas concurs with those reported in a recent study, which found that the state’s Medicaid program could save $1.2 billion over the next decade by managing pharmacy benefits more like employer plans. Recent polling finds voters would rather modernize Medicaid pharmacy than cut benefits for patients or payments to doctors and hospitals.
Many state Medicaid programs pay too much for prescription drugs because they use an archaic, fee-for-service approach in which state officials set payment rates and are therefore constantly lobbied to inflate them by special interests. 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.