Sweeney, Greenstein Push Initiative to Create Prescription Drug Savings Under Medicaid Program

Trenton– Senate President Steve Sweeney and Senator Linda Greenstein yesterday unveiled legislation designed to provide major savings on prescription drug costs in the Medicaid program and improve the quality of care by identifying multi-drug medication risk and reducing adverse drug effects. The bill would push the state to initiate reforms that improve prescription safety and quality, foster efficient pharmacy purchasing, and increase transparency in prescription drug benefits.

“We need to ensure that Medicaid funds are used appropriately and efficiently,” said Senator Sweeney (D-Gloucester/Salem/Cumberland). “As prescription drug prices continue to rise, we must push for new initiatives to control Medicaid costs. Putting the proper controls in place can save tens of millions of dollars while improving the quality of care.”

Yesterday, the Senate Health, Human Services and Senior Citizens Committee approved the Sweeney-Greenstein bill, which, among other things, requires the Department of Human Services to contract with a third party to apply a risk reduction model to prescription drug services under the Medicaid program.

Tabula Rasa HealthCare, Inc., a healthcare technology company, estimates that New Jersey will generate annual cost savings in excess of $80 million if such a model is applied to the Medicaid program.

Nationwide, adverse drug events cause health problems that contribute to more than 3.5 million physician office visits, 1.3 million emergency room visits and 350,000 hospitalizations, cause extended lengths of stay and are the leading preventable cause of hospital readmissions, Dr. Calvin Knowlton, Tabula Rasa’s CEO, told the Senate Health Committee yesterday.

The bill would also require the Department of Treasury to determine the most cost-effective way to administer and procure prescription drug services in the Medicaid program through a single entity. Right now, the benefit is administered by five separate pharmacy benefit managers that have contracts with five managed care organizations. Based on the Department’s findings, it would then be required to procure for the prescription drug services through a single entity.

“We must continue to find innovative ways to save state dollars while ensuring our residents receive the drugs they need at affordable prices,” said Senator Greenstein (D-Middlesex/Mercer). “By implementing various strategies that have proven successful in other states such as: consolidating benefit purchasing, increasing transparency, and implementing medication risk reduction models, the state can increase cost efficiency and improve overall health outcomes in the Medicaid program.”

Senate Bill 887, the Medicaid Prescription Drug Quality, Cost and Transparency Act, now goes to the Senate Budget and Appropriates committee for further review.