Pharmacists Can Help Texas Reduce Medicaid Costs Through Generic Drug Use, Medication Counseling

Urge Caution Regarding Managed Care Proposals Pushed by Corporations
Often Charged With Fraud, Deceptive Practices

Alexandria, Va. - April 7, 2011

Texas policymakers seeking to restrain Medicaid costs should utilize community pharmacists to achieve both savings and optimal health outcomes—and resist proposals that would entrust the Lone Star State's safety net to pharmaceutical middlemen with a consistent record of putting profits ahead of patients, the National Community Pharmacists Association (NCPA) said today.

"Local, community pharmacists see firsthand both patients struggle to afford their medications and states grappling with significant budget deficits. And we're working to help," said NCPA Executive Vice President and CEO Douglas Hoey, RPh. "Community pharmacists are leading the way to dispense lower-cost generic drugs, where appropriate for the patient, and we can work with state officials to further increase their use. In addition, pharmacists are trusted by their patients and can play a leading role to ensure proper medication use—an area estimated to have savings potential as high as $290 billion annually."

NCPA and the National Association of Chain Drug Stores (NACDS) have sent Texas leaders recommendations to help reduce Medicaid costs, while ensure patients have continued access to their local pharmacists.

By contrast, Texas should think twice about turning the Medicaid program over to major pharmacy benefit managers (PBMs), billion-dollar middlemen that continue to face questions regarding their business practices. Specifically, PBMs face questions over:

  • Inflating insurance premiums in the Medicare Part D program, according to a new report by the U.S. Department of Health and Human Services' Inspector General.
  • Refusing to accept a "fiduciary duty" to put the financial interest of clients above the PBM's profits.
  • Fraud and deceptive conduct that increase costs for states, employers and patients. PBMs have paid out $370 million in recent years to settle such allegations. Texas was among the states reaching agreements in 2008 with two major PBMs—CVS Caremark and Express Scripts—alleging that the companies engaged in drug-switching practices to boost profits. The cases were ultimately settled for $22 million and $9.3 million, respectively. The state has also brought separate legal action against CVS Caremark, charging the company with Medicaid fraud and seeking repayment of potentially tens of millions of dollars in "wrongful gains."
  • Windfall profits: While reimbursement rates for local pharmacies continue to decline, major PBM profits reportedly increased fivefold in the past decade, rising in lockstep with the very drug prices that they claim to reduce.

"With such a track record, perhaps it shouldn't be surprising that PBMs appear to again be playing fast and loose with the facts. In this case, it's Medicaid," Hoey added. "The truth is that the present dispensing fees paid by Medicaid to Texas pharmacies fail to cover a pharmacy's cost of dispensing, as determined by a study conducted by the State of Texas and independently verified. Reducing pharmacy dispensing fees would widen that gap and could force pharmacies out of the Medicaid program and reduce patient access to cost-effective treatments. Ensuring adequate dispensing fees is even more important today as Texas proceeds with its plans to reimburse pharmacies at no more than the cost they pay for medications.

"Everyone knows that the most effective means to reduce pharmacy benefit costs is to increase the share of generic drugs dispensed, where appropriate for the patient," Hoey concluded. "But the PBMs' own mail order pharmacies consistently dispense fewer generic drugs, and favor costlier brand-name drugs, when compared to community pharmacies. The Massachusetts fee-for-service Medicaid program has a generic dispensing rate of 79 percent, a rate which could save $5 billion if achieved nationally."

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 or read NCPA's blog, The Dose, at

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