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A few weeks ago, we ran the Tips for Enhancing Your Medicaid Pharmacy Benefits Management (PBM) Programs webinar. PBM program roles have been changing extensively over the last few years, with many states moving their Medicaid enrollees from fee-for-service programs into managed care programs. Nearly 75 percent of the Medicaid population now receive their medical services and prescription drug benefits through a Managed Care Organization (MCO). While each MCO is free to manage their PBM program as they wish (with some limitations), states must take action to manage their PBM programs in the most efficient, cost-effective way possible.  

One of the most critical changes to Medicaid PBM programs has been the rising cost for certain generic and specialty drugs. In fact, the costs of some generic drugs have increased 7,000 to 8,000 percent over just a few months. Specialty drug costs have become so high that they justify an individual or sub-population strategy. Case identification is an important first step, so states should start identifying in advance the people who are likely to need these high-cost drugs.

Once identified, these people can access educational resources and outreach through a Treatment Information Center where they can learn what they need to do so the drug achieves the intended positive outcomes. After accessing this information, people are more likely to better understand: the prior authorization needed to access the drug, how it works, and what limitations they might have while taking it. All of these will help the state lower costs and manage their Medicaid populations more effectively.

States may also consider enhancing how they manage the distribution of certain drugs. One option is through the limitation of providers, also known as lock-in. A recent PBM procurement included a contract with one primary provider, and from there contracts with other providers throughout the state. This example creates the possibility for cost reductions for both ingredients and professional service fees through bulk purchasing, therefore creating a more succinct PBM program.