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States benefiting little from DRA, Part D, survey says

Pharma Compliance Alert, November 22, 2006

Medicare Part D has not significantly reduced state Medicaid pharmacy costs, according to a recent survey of 47 Medicaid programs sponsored by Avalere Health, LLC and the National Association of State Medicaid Directors.

"State pharmacy policies and practices bear a direct impact on the healthcare provided to Medicaid beneficiaries, overall state finances, and the healthcare industry," said Jon Blum, a vice president at Avalere Health and contributing author of the report. "This report provides an indication how states are shaping their pharmacy policies to balance the tension between providing high quality benefits and managing costs."

Although many analysts predicted that the new federal responsibility for dual-eligibles would reduce state spending, some states spent more money by supplementing Medicare Part D coverage for certain low-income beneficiaries, according to the report.

The report also found that two-thirds of states do not expect the Deficit Reduction Act to reduce their spending on pharmacy benefits. The DRA was intended to give states more flexibility to adjust certain health benefits and put more stringent price-reporting requirements on pharmaceutical manufacturers. However, most state Medicaid officials say they are skeptical that these changes will reduce their costs, according to Avalere.

Over a quarter of the states surveyed are part of or are considering joining bulk-purchasing pools to control their pharmacy costs. Some state officials argue, however, that pool participation is unlikely to reduce pharmacy costs or increase administrative efficiencies.

States report using a multiple mechanisms in conjunction with evidence-based pharmacy quality programs to manage both cost and cut down on extraneous prescriptions.

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