April 6, 2011
(Washington, DC) — To help reduce state Medicaid spending and save taxpayers $84 million, Governor Rick Perry ® has proposed that the program’s prescription drug benefits be operated more like those in the private sector that are more affordable and efficient. While the state’s Medicaid program pays more than triple the fees that Medicare and private insurers pay, independent drugstores are continuing to lobby to keep the current system, putting their profits ahead of patients, the Pharmaceutical Care Management Association (PCMA) said today.
“Texas taxpayers shouldn’t pay more for Medicaid drug benefits than private insurers and Medicare,” said 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 $84 million without cutting benefits to those in need.”
The savings projection for Texas aligns 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 private employer plans. Recent polling finds voters would rather modernize Medicaid pharmacy than cut benefits for patients or payments to doctors and hospitals. In addition to Governor Perry, Governors Chris Christie (R-NJ) and Andrew Cuomo (D-NY) have already proposed such changes to reduce prescription drug spending in their own states.
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 like pharmacists. 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.
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 what was a very profitable year for the industry despite the economic downturn.