New Research Report Shows Pharmacy Benefit Management Can Save Medicaid over $100 Billion

Medicaid programs increasingly rely on Pharmacy Benefit Managers (PBMs) to manage drug benefits for Medicaid beneficiaries, whether they have health plan or fee-for-service coverage. A new UnitedHealth Group research report finds that pharmacy benefit management can save Medicaid drug programs over $100 billion.

PBMs generate significant savings for Medicaid by:

  • Driving use of the highest therapeutic quality, lowest-cost drugs and shifting utilization from brands to generics as clinically appropriate;
  • Developing preferred pharmacy networks;
  • Advancing evidence-based, clinically effective utilization; and
  • Leveraging data analytics to detect and prevent fraud, waste, and abuse.

Nationally, PBMs saved Medicaid $6 billion in 2016. These savings represent only a portion of the potential savings achievable through optimal use of pharmacy benefit management in Medicaid. If all states were to fully utilize these PBM tools and capabilities, PBMs could save Medicaid more than $100 billion.

The report goes on to show that over the next decade, optimal use of PBM capabilities in Medicaid by all states would result in:

  • A 23% reduction ($106 billion) in total Medicaid drug spending;
  • Of the $106 billion, states would realize $42 billion in savings; and
  • The federal government would save $64 billion.