Community Pharmacists Can Help States Reduce Medicaid Costs, While Preserving Patient Choice

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Alexandria, Va. - June 16, 2011

The National Community Pharmacists Association (NCPA) Executive Vice President and CEO B. Douglas Hoey, RPh, MBA issued the following statement today on how local pharmacists can help reduce Medicaid costs and in response to a renewed push by corporate pharmacy benefit managers (PBMs) seeking to further increase their windfall profits at the expense of taxpayers, patients and quality health care:

"Community pharmacists are the backbone of the Medicaid drug benefit and reduce costs by helping millions of patients properly take their medication. Independent community pharmacies, in particular, are critical providers to the underserved rural and urban areas where many Medicaid recipients live, and may be the only accessible pharmacy.

"Local pharmacists provide expert medication counseling, which can help reduce the estimated $290 billion spent annually on improper prescription drug use. In addition, community pharmacists are a leading provider of low-cost generic drugs and consistently dispense them more often than PBM-owned mail order pharmacies. According to IMS Health, for every two percent increase in generic utilization, Medicaid costs can be reduced by $1 billion. The Massachusetts fee-for-service Medicaid program has a generic dispensing rate of 79.3 percent, a rate which could save $5.14 billion if achieved nationally.

"Further, new questions continue to surface concerning for-profit Medicaid managed care. Georgetown University concluded that a Medicaid managed care program in Florida significantly disrupted patients and the quality of care without providing any clear cost savings. And, just this week, the non-partisan Commonwealth Fund warned that for-profit, publicly traded managed care companies, like the major PBMs, charge states and taxpayers more for administrative costs than alternative models. Indeed, in recent years, the major PBMs have paid out $370 million to settle charges of fraud and deceptive practices, including in Medicaid, as their profits increased 400 percent.

"Patients and policymakers should continue to work with trusted, highly trained community pharmacists to improve health and lower costs, and think twice about out-of-state, corporate entities that may quite simply be in it for the money."

Independent community pharmacies also contribute greatly to their local economy and tax base. For example, in Florida 1,297 community pharmacies employ 13,942 individuals, including 3,208 pharmacists. Texas has 1,576 community pharmacies that employ 16,938 individuals, including 3,897 pharmacists. New Jersey has 712 community pharmacies that employ 7,618 individuals, including 1,753 pharmacists. In terms of potential savings through greater generic prescription drug use, Florida could save $132 million if their current Medicaid generic dispensing rate of 67% was raised to 79%; Texas could save $200 million if their current rate of 69% was raised to 79%, and New Jersey could save approximately $70 million by if the current rate of 63% was raised to 79%.

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies, pharmacy franchises, and chains. Together they represent a $93 billion health-care marketplace, have more than 315,000 employees including 62,400 pharmacists, and dispense over 41% of all retail prescriptions. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com.

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