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Potential Federal and State-by-State Savings if Medicaid Pharmacy Programs Were Optimally Managed

February 2011

Lewin has estimated the savings that Medicaid programs could achieve in each state through optimal management of the pharmacy benefit. Our estimates take into account each state’s baseline dispensing fees, ingredient costs, brand/generic mix of drugs, and the overall volume of prescriptions occurring in the fee-for-service (FFS) setting. Specific assumptions are made in each of these areas to derive each state’s potential savings. Across the ten-year timeframe 2011-2020, we estimate that total nationwide Medicaid savings of $30.3 billion could occur through optimal management of each state’s Medicaid FFS prescriptions.
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