The MassHealth Pharmacy Program: A National Model for Generic Drug Usage in Medicaid Populations

Massachusetts
State: 
Massachusetts
Organization: 
University of Massachusetts Medical School
MassHealth

In 2001, pharmacy drug spend across the nation was rapidly increasing. Massachusetts’ drug costs represented 12 percent of total healthcare spending, which wasn’t far behind the nationwide figure of 13.6 percent. To address this issue, the Massachusetts Medicaid program (MassHealth) turned to UMass Medical School to identify areas of clinical efficacy and cost savings.

UMass, through its Clinical Pharmacy Services division, worked with MassHealth to develop and implement a generics-first drug list and mandatory generic substitution policies. Over time, UMass identified additional areas of costs savings and efficiency, eventually taking over all management of the MassHealth Pharmacy Program’s clinical components. The program demonstrated immediate success. Just four years after program implementation, prescription drug spending as a percent of total Medicaid spending was only 8.7 percent, compared to 15.3 percent nationally (CMS National Health Expenditures (www.cms.hhs.gov/NationalHealthExpendData).

Since the launch of the UMass-led MassHealth Pharmacy Program, MassHealth has become a national model for the provision of comprehensive access to pharmacy services for Medicaid members, using a cost-effective and evidence-based approach to clinical decision-making. The UMass Clinical Pharmacy Services team achieves $25 in savings for every $1 spent, and the MassHealth pharmacy budget is half of what it was before UMass created the program. Today UMass continues to contain MassHealth costs by designing and applying new, more refined spending controls.