State audit seeks savings in drug plan

Tuesday, July 2, 2002

JEFFERSON CITY, Mo. -- Missouri's Medicaid program could have saved millions of dollars through better management of its prescription drug program, the state auditor said.

The report by Auditor Claire McCaskill was released Monday -- the same day the state began offering prescription drug benefits under a new program for senior citizens not covered by Medicaid.

About 26,000 low-income seniors are enrolled in the new SenioRx Program, which pays 60 percent of their prescription costs after they meet an annual deductible. The program has been estimated to cost the state $33 million this fiscal year.

By comparison, about 870,000 people receive pharmacy benefits through the state Medicaid program.

McCaskill's audit dealt with Medicaid's fee-for-service reimbursement program that covers 480,000 of those people, mainly outside of St. Louis, Kansas City and the Interstate 70 corridor.

That part of Medicaid is budgeted for $797 million this fiscal year.

McCaskill said the state could save nearly $54 million by adopting several cost-containment measures, including a preferred drug list, prior authorization for more prescriptions and a lower pharmacy reimbursement rate.

The state's Medicaid pharmacy director, George Oestreich, said many of McCaskill's cost-saving suggestions already are being implemented.

For example, a preferred drug list could be in place by January with a savings of about $25 million during the following six months, he said. Pharmaceutical companies would have to provide extra rebates to the state for having their products placed on the list.

Rule change sought

The Department of Social Services also is seeking a rule change so it can more easily add drugs to a list requiring state authorization before they are dispensed, Oestreich said.

Because of stringent requirements, anti-ulcer drugs are the only class of drugs requiring prior authorization.

McCaskill's audit also took aim at Oestreich personally.

Oestreich is owner of a Fulton pharmacy and was the chief executive officer of the Missouri Pharmacy Association before going to work for the state last October.

McCaskill said Oestreich should sell his interest in the pharmacy to shed the appearance of a conflict of interest in his state position.

Oestreich said he has considered doing so, but added that it's not a very good time economically to try to sell a business.

Harry Williams, director of the department's legal services division, said a review before Oestreich was hired determined he does not have a conflict because he does not have final say on decisions directly affecting pharmacies.

The review determined that Oestreich did not need to relinquish ownership of the pharmacy, Williams said.

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