Managing prescription drug costs: a case study

Pharmacy costs in most private insurance companies and public concerns have risen over the past several years. To address the problem of increased expenditures in its government employee pharmacy program, the State of New York sought bids from outside vendors to help it control pharmaceutical costs. The following is a case study of the tools the state employed in that effort. Over time, both prescription drug coverage and mental health and substance abuse benefits were carved out of the medical plan and are now provided under free-standing programs. In order to participate, an independent pharmacy must accept a discount of 10% off the average wholesale price of brand name drugs and 25% off the average generic price of generic drugs.