OLYMPIA -- The Department of Social and Health Services has developed a series of drug-purchasing strategies for its Medicaid program that will help control costs, save taxpayers an estimated $109 million for the 2009-11 biennium, increase safety for consumers and hold the program and its providers to higher quality standards.

"These moves give us more flexibility in helping control costs in an era of severe budget shortfalls," said DSHS Assistant Secretary Doug Porter, who heads the DSHS administration that includes the state's Medicaid program. "In many ways, these changes simply let the state take advantage of the same rules the private health industry uses to control its costs and deliver quality care at the same time."

Porter said DSHS remains committed to pharmaceutical quality and safety, and will continue to expect local pharmacists to advise clients on these issues. "We are adding tighter controls on how the taxpayers' dollar can be spent, but we do not intend to disrupt or delete services that have worked well in the past," he said.

The initiatives include:

• Using generic medications, not brand-name drugs, as DSHS' first choice whenever they are available and 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-name products.
• Reducing the reimbursement rate by 6 percent for drugs purchased through retail pharmacies in order to make sure the state payments are closer to what the drugs actually cost.
• Several additional clinical initiatives, including tightened controls on narcotic prescriptions and certain specific medications, also are being developed.

Porter said the increased emphasis on generic and preferred drugs alone will save the state an estimated $44 million.

He said DSHS is working with other state health agencies – the Health Care Authority, the Department of Health, and the Department of Labor and Industries – to increase state use of generics overall. He also noted that most private health insurance plans aim for generic fill rates at more than 80 percent, while the state's rate currently is 63 percent for generics.

The individual initiatives should save the state about $51 million, while the lower reimbursement rate for higher cost drugs begins April 1 and should save taxpayers another $14 million.

Porter acknowledged that pharmacy representatives have told DSHS the lower reimbursement change will be a hardship for them. But he said the decrease in brand-name reimbursements was supported by federal price comparisons in recent years and also that the agency's analysis indicates that moving prescribers toward more use of generics will help lessen the impact of the lower brand-name reimbursements.

"Bringing our reimbursement rate down for brand-name drugs will also put us closer to private insurance payment rates for these same products," Porter said. "Currently, Medicaid actually pays more than many private payers for higher priced drugs in the pharmacy marketplace. That simply isn’t acceptable for a taxpayer-funded program in these times."

FOR MORE INFORMATION AND BACKGROUND:  Jim Stevenson, Communications Director, HRSA, DSHS, 360-902-7604 (Pager: 360-971-4067).

DSHS does not discriminate, and provides equal access to its programs and services for all persons without regard to race, color, gender, religion, creed, marital status, national origin, sexual orientation, age, veteran's status or the presence of any physical, sensory or mental disability.