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Managing prescription drug costs: a case study
1New York State Department of Civil Service, Albany 12239.
Medical Interface
|May 8, 1994
Summary
New York State implemented a strategy to control rising government employee pharmacy costs by seeking vendor bids and requiring pharmacy discounts. This case study details the tools used to manage pharmaceutical expenditures.
Area of Science:
- Health Economics
- Public Health Policy
- Pharmacy Management
Background:
- Rising pharmacy costs impact private insurers and public programs.
- Government employee pharmacy programs face increasing expenditure challenges.
Purpose of the Study:
- To analyze the cost-control strategies implemented by the State of New York for its government employee pharmacy program.
- To document the tools and methods used to manage pharmaceutical expenditures.
Main Methods:
- The State of New York sought bids from external vendors to manage pharmaceutical costs.
- Prescription drug coverage and mental health/substance abuse benefits were separated into standalone programs.
- Participating independent pharmacies were required to accept discounts on brand-name (10% off AWP) and generic drugs (25% off average generic price).
Main Results:
- Implementation of a vendor-based bidding process.
- Restructuring of pharmacy and mental health/substance abuse benefits.
- Mandated discount structure for participating pharmacies.
Conclusions:
- The State of New York employed a multi-faceted approach to control pharmaceutical costs.
- Carving out benefits and requiring pharmacy discounts were key components of the strategy.
- This case study provides insights into managing public sector pharmacy program expenditures.