Medicaid Drug Programs Could Save $30B by Dropping FFS, Study Claims

The remaining one-fourth of Medicaid pharmacy dollars is managed more like pharmacy benefits in the commercial sector, where third-parties use management tools and negotiate pharmacy payments directly with chain drugstores and the drug wholesalers that represent independent pharmacies.

The Lewin study also found that although state Medicaid programs pay widely varying Medicaid dispensing fees, they are largely unrelated to the level of ingredient cost reimbursements a state pays, or the level of generic utilization a state achieves. For example, Texas pays the nation's highest dispensing fees ($7.50) and New Hampshire pays the lowest ($1.75), but they both pay about the same for ingredient costs and generate similar rates of generic drug utilization.

In addition, Lewin said the statutory and supplemental rebates paid to Medicaid by brand name drug makers are determined separately from pharmacy dispensing fees and ingredient costs. This means that manufacturer rebates have no impact on the savings that more active management of dispensing fees and ingredient costs could achieve. Likewise, these savings also do not assume any additional cost sharing for Medicaid beneficiaries.