U.S. Is Proposing to Cut Medicaid’s Drug Payments

By ROBERT PEAR
Published: December 18, 2006

The Bush administration on Monday will propose sweeping reductions in payments to pharmacies as a way to save money for Medicaid, the health program for more than 50 million low-income people.

The goal is to ensure that Medicaid can get drug discounts similar to those provided to large customers in the private market, including companies like Caremark Rx and Medco Health Solutions that manage drug benefits for people who have health insurance through an employer. Congressional investigators have found that Medicaid pays 35 percent more than the lowest price available in the private market for some commonly used brand-name drugs.

States, which share the cost of Medicaid with the federal government, make the final decision on what pharmacies are paid, subject to federal limits.
read more