The Medi-Cal Pharmacy Benefit

Fact Sheet No. 12

This is archived content, for historical reference only.

This Fact Sheet describes Medi-Cal’s pharmacy benefit, which is the most frequently used Medi-Cal benefit and the fastest growing portion of the Medi-Cal budget, with widely varying costs per user. Pharmacy coverage is particularly important to Medi-Cal beneficiaries with disabilities, mental illnesses, and chronic illnesses. It is also of critical importance to elderly Medi-Cal beneficiaries, many of whom are also enrolled in Medicare but must rely on Medi-Cal to pay for their pharmaceuticals.

All Medi-Cal beneficiaries have access to prescription drugs under Medi-Cal’s pharmacy benefit. In CY 2001, an average of 933,338 (36%) fee-for-service Medi-Cal beneficiaries used this benefit every month. There is significant variation in pharmacy costs across categories of Medi-Cal beneficiaries. According to an analysis of FFS Medi-Cal pharmacy expenditures in Los Angeles from January 1997 through March 1999, expenditures per beneficiary increased most among aged, blind, and disabled beneficiaries. Much of the increase was attributable to cost increases for anti-psychotic medications. Pharmacy expenditures per beneficiary per month ranged from $18.97 for medically indigent children to $76.84 for medically needy blind or disabled adults.

There are several pharmacy issues that require attention from policymakers in the near future. Questions include:

  • Are pharmacy cost-containment strategies used in the commercial sector, such as tiered copayments, appropriate for the Medi-Cal program?
  • Can an increased emphasis on provider and enrollee education and disease management reduce Medi-Cal pharmacy expenditures?
  • What opportunities exist to reduce payments or increase rebates without compromising patient care?
  • How might the addition of a prescription drug benefit to Medicare impact pharmaceutical use and costs under Medi-Cal?

Changes to the pharmacy benefit will impact the Medi-Cal budget — sometimes in unintended ways, such as to increase spending for inpatient hospital care. Such changes also may impact the health and financial status of Medi-Cal beneficiaries, especially those who use the benefit the most: the elderly and beneficiaries with a disability, mental illness, or chronic illness. Consequently, it is essential for policymakers to weigh these issues carefully.

The complete fact sheet is available under Document Downloads.