FRANKFORT, Ky. (April 29, 2005) -- The Department for Medicaid Services (DMS) announced it will implement a three-tier prescription drug co-pay system in late May to encourage use of generic drugs. Medicaid members will pay $1 for generic drugs, $2 for preferred brand drugs and $3 for non-preferred brand name drugs.
“Consumer awareness is a key component of our Medicaid modernization efforts,” said Shannon Turner, Commissioner for DMS. “We must create incentives for our members to choose less expensive, equally effective generic prescription drugs whenever possible. This is another step toward controlling Medicaid’s soaring drug costs.”
Medicaid members currently pay a $1 co-pay for all prescriptions. The flexibility to change Medicaid co-pays was approved as part of the budget passed by the 2005 General Assembly. The co-pay will remain at $1 for drugs that do not have a generic form. The co-pay still will not apply to pregnant women and children under the age of 19, Eskimos, Pacific Islanders and Native Americans, institutionalized individuals or individuals participating in waiver programs that are an alternative to institutionalization.
Earlier in April, Medicaid put into place a three-brand allowance for Medicaid members, which allows members to receive three brand-name prescription drugs and unlimited generic prescription drugs per month. Drugs that do not have a generic form are exempt from the limit, and patients will not be refused additional brand-name drugs deemed necessary by their physician. Because of this existing policy, co-pays for brand name drugs typically will not exceed $9 per member in a month.
The use of generic drugs within the Medicaid program has increased from 59 percent in October 2004 to 63 percent in March, following the introduction of pharmacy benefits administrator First Health Services in December. The monthly increase in generic use has averaged 1.5 percent since the transition.
“Our pharmacy benefit is the most significant cost driver for Kentucky Medicaid. The Fletcher administration is committed to making improvements in the Medicaid program that will help it continue to provide quality services for members. When we can decrease costs while maintaining quality, we owe it to Kentuckians to act,” Turner said. “Giving Medicaid members an incentive to purchase more affordable drugs will help preserve access to needed medications and bring about cost savings.”
The Kentucky Medicaid program provides health care for approximately 685,000 members and is projected to cost $4.6 billion during the fiscal year ending June 30. The pharmaceutical benefit is the largest and fastest-growing component of the Medicaid program, estimated to cost $820 million this year.