An economist from a conservative “think tank” says the State of Iowa is over-spending on drugs prescribed to Medicaid patients, but a spokesman for the state agency in charge of the program disputes the data.

Alex Brill, an economist who works for the American Enterprise Institute, says his research indicates low-income and disabled Americans who get their health care coverage through the Medicaid program aren’t always getting the cheapest drug available when they fill a prescription.

“The states’ abilities to drive generic utilization varies, obviously, state to state,” Brill says. “Generally, they’re doing a pretty good job in the sense that they’re doing it right four out of five times, maybe three out of five times, so they’re not unaware of these issues, but they’re leaving a lot of money on the table. In the state of Iowa, it’s up to $14 million that could be saved through consistently ensuring that you’re using the cheapest product.”

Brill issued a national report on this issue Tuesday and he is in Iowa today, meeting with state legislators. “Iowa has one of the highest amounts of overspending on a…per Medicaid enrollee basis,” Brill says. “So by our calculations, the extra spending on the more costly drugs is about $30, $31 per enrollee, where the national average is about $6, and so we think there is the biggest opportunity in Iowa for cost savings by addressing this problem.”

Roger Munns, a spokesman for the Iowa Department of Human Services, says the Iowa Medicaid program already has a list of “preferred” list of prescription drugs and 75 percent of the prescriptions filled by Medicaid recipients in Iowa are a generic drug. “But a requirement to exclude brand names would actually reduce public savings because in some cases there is no generic available but in other cases the generic is actually more expensive than the brand name,” Munns says.

“This is especially true when generics are first released and at that time brand name producers are willing to offer really steep rebates for large purchases like Medicaid programs.” The agency regularly reviews its list of “preferred” prescription medications, according to Munns, to ensure patients are getting the cheapest drug available when they fill a prescription.

“The strategies that Iowa Medicaid uses which is prior authorization and aggressively seeking rebates saved about $125 million just last fiscal year,” Munns says. The American Enterprise Institute economist says he’ll release a more detailed analysis of Iowa Medicaid spending in two weeks.