Reimbursements rates for pharmacies will drop in new fiscal year, DSHS says

Starting July 1 — the beginning of the 2009-2011 biennium — the Department of Social and Health Services will give pharmacies less money for brand name prescription drugs for plans it covers.

Currently, DSHS pays 14 percent below what’s called the Average Wholesale Price — or AWP. The change will drop state reimbursement rates to 16 percent below AWP, saving about $12 million for the state.

DSHS had originally planned to cut it to 20 percent below AWP, but the Legislature set the limit at 16 percent below.

Other plans — like private insurance — determine the percent they’ll pay, too. DSHS said according to their research, Medicaid is overpaying and could go even further — by a bit.

“We completed an analysis of the prescription drug market, and it concludes that the Medicaid reimbursement discount could be justified at even a bigger discount – all the way to 17 percent below AWP,” Assistant Secretary Doug Porter said in a press release, adding that they’re sticking to the limit set by the Legislature.

The drug reimbursement change is one of several initiatives that the state thinks could save about $183 million in the two-year budget period. The secondary goal is to change prescribing behaviors, so that doctors only prescribe Medicaid patients brand-name (meaning more expensive) drugs when medically necessary.

Other initiatives, according to the department, include:

* Using generic medications, not brand-name drugs, as DSHS’ first choice whenever they are available and fully equivalent from a therapeutic standpoint.
* Modifying some of the ground rules on the state’s Preferred Drug List to give the state more flexibility to steer selections to other less expensive drugs that are therapeutic or generic equivalents of more expensive brand products.
* Several additional clinical initiatives, including tightened controls on narcotic prescriptions and certain specific medications.

Tags: Medicaid, pharmacy, prescription drugs, reimbursement rates