Report: Cost-saving tools could save Medicaid $51.1B in next 10 years

ARLINGTON, Va. —  A new report from The Menges Group, sponsored by the Pharmaceutical Care Management Association (PCMA), is taking a look at the potential areas where pharmacy benefit management (PBM) tools could save Medicaid money. The report noted that Medicaid could save $51.1 billion over the next 10 years, including $33.4 billion in federal savings and $17.7 billion in savings to the states. 

 

"There is a real budgetary opportunity for federal and state policymakers to reduce costs while making Medicaid benefits more robust and sustainable," PCMA president and CEO Mark Merritt said.

 

The study identified that Medicaid could save $26.5 billion by optimizing the use of generics, noting that for each percentage point increase in generics dispensing rate yields a 3% reduction in net prescription drug costs. It also found that encouraging use of more affordable, preferred brands could save $2.4 billion over 10 years. 

 

The study also points to selective pharmacy networks as a source of large savings, estimating that Medicaid could save $11.4 billion in the next 10 years by implementing competitive pharmacy contracting processes, and noting that preferred pharmacy options have demonstrated savings of 6.1% in Medicare Part D. The study suggests that by aligning pharmacy reimbursements with competitive levels in the commercial sector using an Actual Acquisition Cost approach.