Report: Medicaid overspent on brand-name drugs

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CMS updates survey guidelines for antipsychotic drugs in dementia care
CMS updates survey guidelines for antipsychotic drugs in dementia care

State Medicaid programs spent $329 million more than necessary by allowing certain prescriptions for brand-name drugs to be filled instead of generics in 2009, a conservative think tank said this week.

The American Enterprise Institute looked at a number of medications with generic equivalents for their study, from anti-psychotics to contraceptives. The single drug causing the greatest “estimated waste”—more than $60 million—was the anti-psychotic Risperdal, which is commonly used to treat dementia patients in nursing homes. The average amount Medicaid overspent on Risperdal per prescription was $137. The eight most wasteful brand-name drugs—which include anti-depressant Wellbutrin—cost state Medicaid programs roughly $279 million, according to the report. Five anti-convulsants—Lamictal, Depakote, Keppra, Topamax and Trileptal—totaled $169 million.

States that over-spent the most were California ($102 million), Texas ($31 million), Georgia ($25 million) and Ohio ($21 million), according to report author Alex Brill. Thirty-six states permit a pharmacist to substitute a generic unless directed by a doctor and 16 states mandate a pharmacist to substitute unless overridden by a doctor, although almost all states require that the patient know when a generic is being given.

In 2009, Medicaid spent $20 billion on prescription medicines. That number is expected to rise, as health care reform will add 16 million people to Medicaid and Children's Health Insurance Program by 2019.